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Budget Statement 2013 (Continued)

Wednesday, 5 December 2012

Dáil Éireann Debate
Vol. 785 No. 2

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  4 o’clock

(Speaker Continuing)

[Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath] We know that three out of ten of them are in arrears of 90 days or more. They will need to pay the non-principal private residence charge next year but the NPPR will then be abolished from 2014 onwards.

  A report by Davy estimates that half of family home mortgages are in negative equity at this point. That is at least 400,000 family home mortgages where the value of the mortgage is greater than the value of the property. How is it fair to impose a tax on a net liability, which is what these families have? It is wrong to suggest that negative equity is not a problem so long as the family can continue to service the mortgage. It is a real trap for people and is deeply unfair to impose a property tax without taking any account of the value of the mortgage vis-à-vis the value of the house. The budget is doing nothing for those people.

  Approximately 160,000 people paid at least €10,000 on stamp duty over the past ten years and many of them had to borrow that money. They are repaying that money every month in their mortgage repayment and as they see it they are already paying their property tax. In addition there are people in rural areas - the Taoiseach will know this well - who have paid up to €15,000 to local authorities in respect of development contributions to build a one-off house in the countryside.

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath Many of them were fiddled.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath They have a legitimate case to make, but that is not being taken into account.

We have an unemployment rate of almost 15%. An Irish League of Credit Unions survey showed that 1.8 million people live in households that have less than €100 on which to live after essential bills have been paid. The reality is that a great many individuals and families will be unable to pay this property tax because they do not have the money. The Minister's attempts to take into account ability to pay with his deferral proposal, where gross income less 80% of mortgage interest falls below €15,000 for single people and €25,000 for a couple, is not adequate. That will simply open an administrative nightmare. People who cannot even pay their mortgage are now being lumbered with having to work out whether they are entitled to a deferral of their property tax obligation.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan When will Fianna Fáil apologise to all these people?

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath For many older people this will become a tax from beyond the grave - a tax on a home they have spent an entire lifetime to secure. On their death, instead of being safe in the knowledge that the home will pass to a loved one, the taxman will be first in the queue to take a slice of the value of their home. The deferral the Minister has announced today will be subject to an indexation per annum. So for every year that somebody on the State pension defers payment of the property tax it will increase by 4% per year. It is a major concern for older people to have coming to the end of their lives that they will have to pay such a punitive tax.

I have serious concerns about how the self-assessment system will work. How are people to know what their property is worth today? What will the penalties be if they get it wrong? The Minister referred to people getting a valuation on their property. Is he encouraging them to spend a further €100 or more every year to have a valuation done on their property so that they can ensure they remain within the law? The Minister has estimated a yield in a full year of €500 million. According to the Department of the Environment, Community and Local Government and its Minister, Deputy Hogan-----

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath Where is he?

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath -----some 1.6 million households are potentially liable for the household charge. The Department of Finance document states that the Revenue believes there could be up to 1.9 million households liable. Let us use the Department of the Environment, Community and Local Government's figure of 1.6 million. The full-year projection of €500 million divided by 1.6 million households assumes a 100% collection rate and gives an average charge per house of €313. Does the Minister really believe he will achieve a 10% collection rate in respect of the property tax? I believe he will need to revisit the estimated yield from this measure.

Will the banks be liable to the property tax for properties they have repossessed from families? Why is the Minister excluding sites that are zoned for residential development, which would have been captured under a site-value tax? The proposed mansions tax is little more than a sop to the Labour Party in return for Fine Gael getting its way on the highest income earners not having to pay any more direct taxation. The mansions tax is essentially a Dublin tax. Homes worth more than €1 million are rare enough in Dublin and are extremely rare outside Dublin.

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath What about the one in Moneygall?

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath How much additional revenue will this yield? It is clear from the budget documentation that up to the €1 million threshold they are only liable to 0.18% and the 0.25% rate only applies to the excess over €1 million. One wonders how much extra revenue will be delivered by this so-called mansions tax in the way the Minister has configured it.

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath The Minister, Deputy Reilly, has one in Moneygall.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath The expected yield from this along with the money in respect of the 3% on pensioners, which is approximately €38 million in a full year, should be compared with what would have been achieved if the Tánaiste had got his way and added 3% to the universal social charge for those earning more than €100,000, which would yield up to €200 million. The Government would have had far greater choices if it had access to cash in that regard.

The Minister has extended carbon tax to solid fuel, a measure that will hit many of the poorest households that rely on coal and turf for basic heating. Some of these people have installed stoves in recent years and will be particularly hard hit by the addition of carbon tax to solid fuels. The Minister should reconsider this measure which will hit the poorest households the hardest.

Our budget submission called on the Minister to build the budget around certain priorities. The priorities we suggested were the areas of education, mental health and disabilities. Considering what is proposed in the budget, I am deeply concerned that the health cuts being unveiled will result in further cuts in direct services for people with disabilities.

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin There is nothing in it at all.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath It is fine for the Minister to shake his head. We will find out in coming weeks when cuts affect service providers such as COPE Foundation, Jack & Jill Foundation and the Brothers of Charity Services. Their cuts are never outlined in the budget document but when it comes to the national service plan being agreed they will get a cut. I hope the Minister proves me wrong and he protects them. I hope there are no further cuts to direct disability services. Let us wait and see. I hope the Minister is right and that there will be no cuts. Is he giving such a commitment today?

Deputy Finian McGrath: Information on Finian McGrath Zoom on Finian McGrath The Minister should go on and give us a commitment.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath The Minister can offer a commitment today that they will not be cut and put it to bed. Will they be cut or not?

(Interruptions).

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath The Minister will not answer the question. That is the bottom line.

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath The Minister has gone very quiet now.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Order, please.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath Buried in the depths of the expenditure reductions is a €325 per annum cut in the respite care grant from €1,700 to €1,375. That is a cruel cut and there is no need for it to be implemented. My God, the bar has been set so high to qualify for a respite care grant now that many people with a family member, who has a serious disability, either use that grant to get a break - use it for respite - or they use it to provide essential intervention services for their loved one to fill the gaps where the HSE is not providing those services. There is no need for that cruel cut and I ask the Minister to reverse that cut which hits the most vulnerable people. Given the choices the Government has made in respect of taxation, it is impossible to justify that people with special needs should suffer a cut affecting their standard of living, which will add extra anguish and pain to the family members who care for them and save the State billions of euro every year in the process.

At the conclusion of my budget speech last year, I made the point that I have repeated since that the fairest way to measure the Government's performance on the economy is by measuring how successful it is at tackling the jobs crisis. I welcome some of the initiatives outlined in the Budget Statement, which hopefully will help the SME sector to create additional jobs here. Since the Government came to office in March 2011, using the official CSO figures, the quarterly national household survey seasonally adjusted, there are 30,000 fewer people at work. The unemployment rate increased from 14.3% to 14.8%.


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