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Finance (Local Property Tax) (Amendment) (No. 2) Bill 2015 [Seanad]: Second Stage (Continued)

Friday, 11 December 2015

Dáil Éireann Debate
Vol. 900 No. 3

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(Speaker Continuing)

[Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming] More than 2,000 people have applied for the exemption. Just 5% of those who have applied for the exemption have been awarded it. The Minister of State will have to revisit this issue to ensure the cases of those who have applied are dealt with fairly, promptly and quickly. I suppose another consultants' report will have to be obtained to enable the Government to decide how best to proceed.

  I would like to mention another issue pertaining to the recognition of houses that arises in the context of the local property tax. The Minister of State and I had this exact discussion in the House on 23 October last, when I initiated a Private Members' Bill only for it to be voted down by the Government. People who live in some apartments and managed estates are being taxed on the double for services because they are paying management fees and the full value of the local property tax. Some, although not all, of the services for which they are paying through their management fees should be provided by local authorities. I introduced the Management Fees (Local Property Tax) Relief Bill 2015 earlier this year to deal with this anomaly. I thank Senator Darragh O'Brien, who has championed this matter in the Dublin area and got the party to approve the legislation. I proposed the Bill in the Dáil on his behalf, essentially because he was unable to introduce it in the Seanad due to the prohibition on tabling finance Bills in that House. I am sure he has subsequently discussed the legislation at length inside and outside the Seanad. I hope he has done so in his constituency and the other constituencies that are affected by this issue.

  One of the amendments I intend to propose on Committee Stage today reflects the essence of the Management Fees (Local Property Tax) Relief Bill 2015. The Minister of State will note that the amendment proposes to amend the Finance (Local Property Tax) Act 2012 by including the following provision in it:

Where a liable person is obliged to pay an annual management fee in respect of a relevant residential property and said management fee is paid in full, then such person shall be exempt from having to pay part of his or her local property tax in a relevant year, the amount of that part being any of the following:
(a) equal to one third of the management fee;

(b) €300; or

(c) equal to one third of the local property tax;
whichever amount is lower.

I stress that this would apply where the management fee is paid in full. It would be a modest amount of money in each case. We went through the details of the costings of such a measure when we considered the Bill I proposed in October. It would cost €17 million. There are people who are paying on the double, in effect. Perhaps the Minister of State would give this proposal a second thought.

  I genuinely agree with what has been said about people who have had their houses adapted for disability purposes. I also agree with what has been said about pyrite, although I would be happier if the Government did some of what it has said it is going to do. It needs to implement the proposal to give some people who have been affected by pyrite an exemption from the local property tax. There is still a list of exempted properties, including properties in unfinished estates. I think one of the categories accepted by the Department of the Environment, Community and Local Government for the purposes of exemption involves estates where there are no footpaths running up to the front doors of houses. Will the Minister of State agree today to my proposal that houses which have water running in their front doors and out their back doors and washing all and sundry in front of them - they may or may not have footpaths to their front doors - should be exempt from the local property tax? The houses that are being affected by the current flooding should have such an exemption. The Oireachtas should provide for that today. We will have an opportunity to make such provision as this Bill progresses. I think most people will agree that this proposal is fair and reasonable. I would also like to propose, even if it does not relate exactly to this Bill, that the Government should commission a report on the possibility of giving an exemption from commercial rates to businesses affected by flooding. Assistance of this nature should not be confined to people affected by flooding who have to pay local property tax on their houses.

  I would like to make a further point about this matter as it applies to the question of commercial rates, which is relevant because legislation on it is being drawn up by the Department of Finance. Although the Minister of State will have the backing of this House when over the coming days he goes to places that have been affected by flooding, how will he be able to look at businesses that have been flooded while reminding the owners of those businesses to pay their commercial rates at the beginning of 2016? I suggest he needs to be in a position to say to those whose businesses have been destroyed that the Government understands that this is going to cost them a great deal of money, regardless of whether they have insurance cover. The Government needs to make it clear not only that it is showing empathy to people whose businesses have been destroyed by exempting them from commercial rates, but also that it is standing with householders whose houses have been flooded by relieving them of the requirement to pay the local property tax. I look forward to hearing the Minister of State's response to the issues I will be raising during the course of the debate on this Bill. I hope he accepts the principle that people who have been flooded out of it in recent times should not be asked by the Government to pay the local property tax in the first week of January 2016.

Deputy Peadar Tóibín: Information on Peadar Tóibín Zoom on Peadar Tóibín Ba mhaith liom i dtús báire freagra a thabhairt ar an méid a bhí le rá ag an Aire Stáit faoi "stability" i gcomhthéacs an cáin mhaoine áitiúil. Dúirt sé go bhfuil an cáin seo mar shaghas tacaíochta do "stability". It is clear that the Minister of State has not been listening to the Irish Fiscal Advisory Council's latest pronouncements in which it refers to the Government's actions as a threat to stability. Obviously, stability has many seams. I refer to fiscal stability and social stability, for example. We know the Government has created enormous social instability over the past five years in whole swathes of our society. In health care, almost 100,000 people will spend time on trolleys this year. In housing, hundreds of thousands of people are in mortgage distress, are waiting for houses or are paying exorbitant rents. People are suffering. Some 3,000 children are being told to stay on painkillers for six months while they wait for dental work. Young children who are growing are waiting for far longer than they should to gain access to Our Lady's Children's Hospital, Crumlin for back operations. These are examples of the social instability that has been caused by the Government over the past while.

Fiscal stability is very important as well. The Minister of State spoke about broadening the tax base. In fact, the Government has taken €750 million out of the tax base this year. It is shifting the tax base towards corporation tax. Although corporation tax is welcome, I emphasise that it is not being paid at the rate at which it should be paid. It is extremely unstable. The Government is shifting progressively away from personal taxation, which is a stable form of taxation, and towards corporation tax, which is extremely unstable at the moment.

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor Personal taxation depends on jobs and on people working.

Deputy Peadar Tóibín: Information on Peadar Tóibín Zoom on Peadar Tóibín Exactly. There is no doubt about it.

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor There would be no guarantee of that under Sinn Féin's policies.

Deputy Peadar Tóibín: Information on Peadar Tóibín Zoom on Peadar Tóibín I welcome the fact there should be taxation on jobs.

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor Sinn Féin wants to increase taxes.

Deputy Peadar Tóibín: Information on Peadar Tóibín Zoom on Peadar Tóibín In 2004, 2005 and 2006, Bertie Ahern shifted taxation from personal taxation towards stamp duty, which applies in a very unstable section of the economy. The current Government is doing the exact same thing and thereby creating instability.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris No.

Deputy Peadar Tóibín: Information on Peadar Tóibín Zoom on Peadar Tóibín Incredibly, some 140 companies pay 70% of all corporation tax. The focus on this narrow sector of society reminds me of the focus on another narrow sector of society - the construction industry - some years ago. The Government has created an unbalanced economy, with 90% of exports coming from the foreign direct investment sector. Countries like Denmark and Austria provide approximately 40% of their own exports indigenously. We provide 10% of our exports indigenously. That leaves us extremely exposed. Exposure to shocks is an instability in itself. If, God forbid, the US President who is elected at next year's election in that country decides to change significantly the tax scenario upon which this country focuses its strategy, that shock could significantly reduce both the tax base on which we have become more dependent and this country's level of exports, which make up a considerable element of gross domestic product.

I would like to make another point in response to the Minister of State's remarks about "stability". The Irish Fiscal Advisory Council has spoken about an output gap. We have gone from a very high peak in the Bertie days to a very deep trough in the era of the current Government. There is a degree of pent-up spending. There is also deflation because of the recession that occurred. That, accompanied by the Government's gouging of billions of euro from the economy, has led to the significant but volatile bounce-back we are seeing at the moment. The Irish Fiscal Advisory Council is of the view that the output gap is shrinking so much that an inflationary aspect would emerge in this country's economy if €4 billion were taken out of personal taxation in the form of the universal social charge. In other words, the accentuated pro-cyclical system we are in would continue. The Government's policy for taxation over the next five years is to take €4 billion out of personal taxation in the form of the universal social charge.


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