Vol. 469 No. 3
I move:
That Dáil Éireann calls on the Government to immediately abolish the residential property tax given that this form of taxation unfairly penalises those who reside within certain regions of the country.
I wish to share my time with Deputy Bertie Ahern.
I am sure that is satisfactory. Agreed.
Residential property tax was born of the Fine Gael-Labour Government in 1983. I repeat the commitment given by me on behalf of Fianna Fáil on budget day 1995, that Fianna Fáil will repeal residential property tax on its return to power. The political parentage of this tax was thrown into some doubt upon publication of the memoirs of former Taoiseach, Dr. Garret FitzGerald. The notion of residential property tax was always claimed by the Labour Party and sold as such from its inception. However, in his book, Dr. FitzGerald took umbrage at this notion and suggests that he and his daughter-in-law, now Minister of State Deputy Eithne Fitzgerald, were the originators of this daft concept. That proves Dr. FitzGerald has lost none of his very likeable political innocence since leaving power. One would have thought that few politicians would rush to claim such a stupid tax, but such considerations do not trouble Dr. FitzGerald.
What was the political rationale behind the introduction of residential property tax in 1983? The politics and philosophy behind such a tax was born out of the confused social thinking so beloved of Irish politics, the typical old Labour Party doctrine of begrudgery. The doctrine in politics of begrudgery is beloved by the left in Irish society, and acolytes and disciples are to be found in some media productions, print and broadcast. Although the politics of Europe has changed remarkably in the past decade, Ireland remains a bastion of an old regressive, sterile and outdated rhetoric of the left.
The Labour Party thinking in 1983 on residential property tax was roughly based on the concept that people in large houses should be taxed more. Someone would then have asked: "What about dear old ladies who live in large houses but have no income?" I presume some Labour Party guru came up with the idea of the income threshold and thus the residential property tax came into being.
The political philosophy of denigrating those who make an effort to improve themselves was not confined to the 1960s, 1970s and 1980s but was at the background of much of the thinking of politicians and advisers, particularly those of the left, in recent years. It can be summed up by the suggestion that if one makes a success of their lives, whether getting a job or promotion or starting up a business and employing people, one is to be denigrated. Those people are usually praised for a few years and told they are great to employ 200 or 300 people, but as sure as night follows day, if people are too successful they are pulled down by those who probably have denigrated them from the outset. That is a unique Irish phenomenon which has grown apace in recent years, particularly in some publications. It was at the root of much of the difficulties and thinking of the 1990s and was referred to in many debates in this House. Many people who make a success of themselves and provide employment are pulled down by people using the privilege of this House and by their acolytes in the media. Those who go to the effort of making a success of themselves should not be denigrated.
Most politicians will agree with what I am saying, but one cannot be too outspoken in this regard because one would be given the tag "right-winger", one who is in favour of making the poor pay. People in cushy jobs, usually supported by the State or by institutions, those who have enough money to pay their employees and have never been forced to let them go, denigrate people who have had to mortgage their houses in order to support their business. That form of begrudgery is endemic in Irish society.
I am sure the Minister of State will agree with much of what I say in that regard. It is to the shame of many politicians and commentators that this practice has become the accepted form. It is at the root of much political thinking of the present day and it was at the root of the concept of residential property tax in 1983. The rationale behind the confused economic thinking of many people such as Dr. Garret FitzGerald escapes me now as it did then.
Unless we are prepared to accept the "risk and reward" principle we will not encourage native Irish entrepreneurs and business people to get ahead. If we foster the practice of knocking the man or woman who makes a success of themselves we are at nought. We never seem to knock the entrepreneur who comes here from afar or the multinational which sets up in one of our constituencies. It is the Irish person who perhaps started off with very little and has worked very hard who is constantly knocked. In recent years a number of Irish people have suffered in this way, although nobody would say that everybody in business is a saint.
Those who have survived and succeeded in business despite the bureaucracy have to work hard and possibly on occasion have to take short cuts. Whenever I hear Members of this House, particularly from the left, denigrating or criticising such people whenever a mistake is made I feel violently ill because the people concerned have not created one job in their lives. Those who make policy and policy initiators within the Civil Service should bear this in mind. Unless we make some efforts to correct this confused political thinking and devise a new political, social and economic philosophy which praises the man or woman who makes an effort we will be at nought.
There was no logic behind the introduction of residential property tax and there is no logic behind the concept now. It is worth commencing this debate with a few thoughts on what the tax is all about. It is a tax on property, on a family or individual's home but unlike any other tax that I can think of and over which we may wish to disagree violently it does not start from an equitable basis. Many taxes have ended up being inequitable but each one that I can recall started out from an equitable basis.
Residential property tax is not an income or wealth tax; it is discriminatory, anti-family and grossly unfair. By its very nature it is arbitrary in its application. Yesterday, 1 October, was D-Day for residential property tax returns. Any member of the parties in Government can state what they like on this issue. If Fianna Fáil is of the view that a tax or policy is downright unfair, discriminatory, biased or penalises one section of the community or any one region it will immediately address the issue and abolish it. We have promised to do this in the case of residential property tax.
I wish to refer to the decision of Deputy Bertie Ahern when Minister for Finance in 1994 to adjust the valuation and income thresholds. My party leader may be too much of a gentleman to say so but as a member of the then Government I feel under no such constraints. The question of why the thresholds were adjusted should be put to the Labour Party members of that Government or alternatively to the spin doctors of the Labour Party both then and now.
The amendment tabled to this motion in the name of the Minister for Finance, a member of the Labour Party, reads: "That Dáil Éireann notes the speedy action taken by the Government in the 1995 budget to reverse, as promised in its Programme of Renewal, the changes in the income and house value thresholds for residential property tax introduced in the 1994 Finance Act...". Perhaps my former colleague, the Minister for Finance, Deputy Ruairi Quinn, would explain to the House why the income and house value thresholds were changed. I am constrained by the principle of Cabinet confidentiality but it was not Deputy Bertie Ahern, Deputy Cowen or me who thought up the idea.
The Deputy is blaming the Labour Party. We will not have to wait 30 years for the Cabinet papers.
These are the facts.
The Minister for Finance should speak up. It takes neck to table an amendment in the name of the Minister for Finance who has made a virtue out of changing something that he more than anyone was responsible for introducing.
He insisted on it.
Deputy Cowen used the words "insisted on". I would go so far as to say that. These are the facts and everybody who was a member of that Government knows what I am saying is correct.
It seems there is no such thing as collective responsibility.
The Deputy should not talk to me about collective responsibility. In the case of Aer Lingus he was told to walk. He did not have the bottle for the battle.
I had the bottle to take the Deputy on.
There is no need for interruptions.
I am sure the people of Malahide and Sutton will note Deputy Sean Ryan's contribution to the debate and that he is in favour of residential property tax.
We are opposed to it.
Deputy Ryan doubtless will have his chance shortly. In the meantime he should contain himself in quietude. Deputy Cowen should do likewise.
We will await Mr. Grafton's speech.
It is an inescapable fact that residential property tax is inequitable. No one can seriously disagree with that statement. It must be abolished because it penalises those who reside within certain areas of the country. It is those who reside within the Dublin region who are hit hardest.
The Deputy's party had seven years to abolish it."
The figures clearly demonstrate that it is the citizens of Dublin city and county who pay the greatest proportion. On 5 April 1994 75 per cent of the persons paying residential property tax were residing in Dublin city and county. On 5 April 1995 this figure had increased to 77 per cent. Residential property tax is not working because it heavily penalises many thosands of households who have endeavoured to provide a home base for themselves and their families. The attributes of endeavour and hard work have been penalised by this discriminatory tax which has left many thousands much worse off.
In recent weeks the parties in Government have been jockeying for positions in the lead-up to next year's budget. Fine Gael seems to be advocating a reduction in tax rates; Democratic Left seems to favour a widening of the tax bands while the Labour Party appears to be confused on the issue.
We are not confused.
It is obvious to everyone that this politicking is designed for one side or the other to gain advantage in the 1997 general election.
Earlier today the end of September Exchequer returns were announced. The following question is pertinent. Why did the Government grant few tax concessions in the 1996 budget? The net benefit to the ordinary taxpayer amounted to a measly £15 million. The Government deliberately short changed the taxpayer this year in order to improve its electoral position for the 1997 budget.
Taxation, once it is on a fair and level playing field, undoubtedly plays a significant role in the functioning of any modern democratic society. Only taxation which is fair can ever be acceptable to those who have to pay it. A nation's health, education and welfare support systems and many associated and sundry services require funding. The majority of these services are underpinned by the taxation system. We must pay a certain level of tax to pay for services which keep a modern society functioning. A country must have a fair and unbiased system of taxation but residential property tax flies in the face of this basic notion.
What is fair about somebody living and supporting a family in Dublin who has endeavoured over many years to own their own family home ending up paying upwards of £1,000 in residential property tax when a family in Galway, Limerick, Cork, Waterford, Wexford or even Kildare with a similar house, similar number of children and income levels etc. does not have to pay this tax? What is fair about somebody who has had to seek work in Dublin or its outer regions, in a firm such as Intel in Leixlip, for example, suddenly have to fork out up to £1,000 in residential property tax?
We can talk all night about yields, thresholds and percentages but one thing is abundantly clear; residential property tax is basically unfair. Not only is it unfair by its very nature and structure, it has also proved to be a tax which is fundamentally oblivious to what is happening in the property market, particularly the Dublin residential property market.
Since the inception of residential property tax in 1983, income levels and property value thresholds for RPT have increased by 5 per cent to 5.5 per cent over the period of the tax, whereas property prices over the same period have risen in excess of 30 per cent. This dramatic divergence continues to grow and if current and forecast property prices hold true, it will become greater and the unfairness will continue.
The house price boom, particularly in Dublin city and county areas, has gone from strength to strength and shows no sign of abating. Many people seem to think that those who are rolling in money and live in fine houses and mansions on plenty of land are the only ones affected by residential property tax. That is not the case.
I was given figures recently which show the way in which the prices of ordinary houses have changed in the past five years; these figures can be verified. For example, in 1991, a house in Heytesbury Street, Dublin was sold for £67,000; in 1996 it was sold for £148,000. In Clontarf, a house sold in 1989 for £90,000 was sold this year for £160,000. In Sutton Park, an area I believe Deputy Sean Ryan knows, a house sold in 1989 for £80,000 was sold in 1996 for £130,000. Ordinary houses are now in the residential property tax net. The figures I have given are accurate and relate to sales in the years I have mentioned and sales this year.
What about Kildare?
With the increase in population in Kildare caused by people coming from Dublin——
There is not much property tax in Kildare.
——house prices are falling into this particular category also.
Deputy Broughan will get an opportunity to participate in the debate.
Are they sending in the animals or will we have a speech from the Labour Party at some stage?
I am sure Deputy Broughan intends to make a virulent attack in this debate and play to his audience in his constituency in the hope that he will survive in the next election, but given the opinion poll figures I read——
We always opposed it.
——in relation to Dublin North Central, I wish him every luck because he will need buckets of it between now and the next election if he wants to come back here.
The Deputy's Leader doubled it.
The Deputy must desist from interrupting. He will have a chance to participate in this debate but in the meantime he must remain quiet.
Many modest, modern, three and four bedroomed semidetached or terraced family houses in many parts of Dublin now fall within the residential property tax net. These fairly modest houses, which are now achieving prices in excess of £100,000, were valued at the £40,000 level when RPT was introduced in 1983.
The Deputy can buy three or four in my constituency.
In January of this year alone, house prices in Dublin rose by a further 15 per cent and, in some suburbs of the city, there have been even bigger increases in property prices.
In calling for the abolition of residential property tax, which arbitrarily culls money from those who live in a particular area, have a certain income or are of a certain age, we are aware there must be an urgent and full debate on the issue of local government financing.
The Deputy ran away from that.
We must be fully aware that over the years the yield from residential property tax never went to local government; it always found a home in the central Exchequer.
The Deputy's party pulled out of Government.
In the week that Fianna Fáil again underlined its commitment to abolishing residential property tax, it is indeed ironic that the Minister for the Environment, Deputy Howlin, has abandoned Government plans to publish a White Paper on local government reform.
Fianna Fáil had an opportunity of getting all-party approval. Where is that?
Put us back into Government.
The irony was added to earlier this week when a number of Government Members rubbished Fianna Fáil's campaign to repeal residential property tax as an election stunt. We now hear that the Minister for the Environment has abandoned his own plans because they may not find favour with the Labour Party electorate and would cause major damage as an election looms. Yet Members come into the House and make speeches about Fianna Fáil in this regard. Our Environment spokesman, Deputy Dempsey, rightly claimed that Minister Howlin's decision to carpet the issuing of a White Paper on local government reform——
That is not what the Deputy's Leader said.
——was motivated by a desire to postpone urgent and critical debate on a crucial issue until after the next general election.
The Deputy should talk to his Leader.
Fianna Fáil has already stated that we desire an all-party committee to discuss local government funding. I would like to again emphasise what our party Leader, Deputy Ahern, pointed out recently, Whatever the colour and nature of the debate on issues such as residential property tax and local government funding, and regardless of any mechanisms that may be put in place, there should not be an increase in the overall levels of taxation.
Residential property tax should be repealed at the earliest opportunity. There is no clear and concise argument for maintaining such an arbitrary and discriminatory tax.
It is a pity the Deputy did not think of that seven years ago.
I want to give a brief example of the unfairness of RPT. Take a family of four who reside in a family home and earn the average industrial wage. They worked hard and purchased a family home. They do not have any control over the fact that their modest two or three bedroomed house has suddenly zoomed in value from perhaps less than £30,000 a few years ago to above the RPT threshold today. Those who endeavoured to better themselves and their families are now being penalised due to the inequity of residential property tax.
The Deputy doubled the number in 1994.
Residential property tax is not a rich man's tax. That is a complete fallacy. It hits ordinary people, families and individuals without these home owners having any real control over the very factors which pull them into both the income and property value threshold nets.
It does not hit Kildare.
Residential property tax is unfair. It goes against the notion of fair play. It does not and should not belong in a modern and fair society Fianna Fáil is committed to the abolition of residential property tax and this week we launched a campaign to have it abolished.
Rather late in the day — the road to Damascus.
As our advertisement states, the rightful home for residential property tax should be the dustbin.
The Minister for Finance announced Exchequer returns today which give credence to the good economic performance——
Buoyant.
——we enjoyed over recent years and which he recognised in his statement by saying that the correct fiscal measures introduced some years ago were the main cause of these particular changes.
As opposed by Members opposite.
I am sure that sentence was put in by a civil servant in the Department of Finance — the Minister must have missed it — because I do not think it was meant to be included. At a time when we are enjoying the fruits of prudent financial management over a period of years, this discriminatory tax, which in its essence is unfair, should be repealed and I call on the Minister of State at the Department of Finance to support this motion.
As our spokesperson on Finance has outlined, Fianna Fáil is making a clear, unambiguous commitment to abolish residential property tax within the framework of our strategy for the public finances. This is essentially a tax on those who live in locations rated in an order that makes them liable to penal taxation and, therefore, it lacks equity. Because of the rise in house prices, houses that were never intended to be included are being brought into the net whereas, in the past five years, property thresholds and income limits have only been raised by an average of 1 per cent per year. Some household properties have almost doubled in value in the interim, as had been pointed out by Deputy McCreevy.
As I have continually argued both in and out of Government, RPT is a cumbersome and administratively costly tax which raises remarkably little revenue. It is a symbol of thinking that has gone out of date.
Why did the Deputy not abolish it?
If it is retained it can be for the purpose of having the option to make it more severe after the election. There is obviously great division in the Coalition ranks on whether to retain or scrap RPT.
The Deputy had his chance.
I would be interested to hear Deputy Broughan's policy. This tax was first introduced in 1983 by the Fine Gael-Labour Coalition. The former Taoiseach, Dr. Garret FitzGerald, claims credit for it in his memoirs, working in conjunction with his daughter-in-law, now Minister of State, Deputy Eithne Fitzgerald. The Labour Party was always naively enthusiastic about it, seeing in it a major revenue-spinner, and would be loath to see it go, judging from the remarks of Deputies on the Government benches tonight.
Let us have an orderly debate. Repeated interruption is not on. Let us hear the Member in possession without further interruption.
The residential property tax was one of nearly a dozen new taxes or major tax increases introduced by Fine Gael and Labour from 1981-83. It is a monument to the appetite for extra taxes which were always a softer option than restraint or curtailment of spending. Prior to the national Coalition of 1973, we were a relatively low tax economy. If we want to sharpen our competitive edge, we must gradually work our way back to that position — the policy put forward by our spokesperson, Deputy McCreevy — by keeping a tight rein on spending increases and eliminating further borrowing that adds to the national debt.
It has been argued that residential property tax restrains high prices paid for houses. The 6 per cent stamp duty on houses valued above £60,000 already raises substantial revenue on more expensive houses. We should encourage wealthy people to live in our country as we did in the 1940s and 1950s. The Chester Beatty, Beit and Hunt collections are among the benefits which accrued to us from people living here in decent houses and not driven out by wealth taxes. There could, in future, again be people who will prefer to come and live here, if there is peace. It is already happening in many locations. People want to come and live in west Cork but do not want to pay RPT.
We do not have that kind of building in west Cork. Nor do we have the money.
At the moment RPT is not paid in west Cork. It is on the record that Deputy Sheehan is calling for RPT in west Cork. Whatever the arguments for taxes on wealth, they drive away wealth rather than attract it. The Rainbow Coalition are very naive——
There is always a pot of gold at the end of the rainbow.
——they think voters will be impressed by last minute electioneering give-aways in next year's budget. The Exchequer returns published today show how much taxpayers were short-changed by the Government this year. People will remember how little of their money they got back in the 1995 and 1996 budgets.
What about the 1993 and 1994 budgets?
The only argument between me and Deputy McCreevy was about whether the figure was £15 million or, as shown in one of the Government documents on the 1996 budget, £12 million. With 1.4 million people working in this buoyant economy with 8 per cent growth last year, just less than the growth rate during the last year I was Minister for Finance, the Government managed to get only £15 million net. I do not believe my former colleagues in the Department of Finance have got the Exchequer returns wrong because nothing changed during the course of the year; the figures we were given here on the last Wednesday in January were suppressed by hundreds of millions of pounds to con the people, maintain the nest-egg and make the 1997 budget seem a huge give-away.
That is scandalous.
Labour and Democratic Left are irreformable public spenders. In their book, tax concessions are due only once every five years to keep voters sweet. Otherwise, they see the Government's job as being to collect and spend as much taxpayer's money as they can. In the past two years current day to day spending has increased by four times the rate of inflation, and Exchequer capital spending by seven times the rate of inflation. They are the facts based on the figures issued today by the Government. Employment and living standards will not progress as they should. Last year's and this year's performance show that there is no serious political commitment by any of the parties in Government to lowering taxation and making the economy more competitive when things turn again against us, as they definitely will.
Fianna Fáil was the first Government in 20 years, from 1989, to start seriously lowering the burden of taxation, cutting the standard rate from 35 per cent to 27 per cent and the top rate from 58 per cent to 48 per cent. We reduced VAT from 25 per cent to 21 per cent and corporation tax from 43 per cent to 38 per cent. We created the consistent positive growth from 1987, and the current high growth phase which began a number of years ago. It was our prudent management of the economy over many years that made this Minister awash with money.
Compliment our current Minister.
Our economy is not as competitive as it should be, and we run the danger of some industrial firms relocating.
Deputy Ryan, desist.
The Deputy would not know the economy if it hit him in the face.
The Government knows how to wreck it. It did so three times in 30 years. Our tax system is an integral part of our overall competitiveness, and if we want sustained employment growth we cannot afford to neglect to bring our tax system more closely in line with our closest competitors. We are uniquely favourably placed to do this at present, but we are squandering the opportunity.
The Government has been increasing spending in nearly all directions except health and law and order, where the hospital queues lengthen and the problem with drugs and crime is not being brought under control. Over 1995 and 1996 Fine Gael, Labour and the Democratic Left missed their spending targets by a mile. They have stuffed ministerial offices with outside appointees, where Fianna Fáil chose its programme managers from within the Civil Service. A Tánaiste Office was established to enhance the status of one leader, and another leader in this Government copied him, while we had to legislate for an extra Minister of State for the Democratic Left and create an extra seat at the Cabinet table for another Minister from the Democratic Left. Some Ministers are treating the European Presidency as a lavish constituency benefit. The Minister for Arts, Culture and the Gaeltacht, a friend of my colleagues on the left over there, has spent a total of 54 per cent of the non-Arts Council arts funding in his own constituency——
And still it will not save him.
——and 25 per cent of capital expenditure. If we were in office, I can imagine the charges of favouritism and cronyism that would flow from the Labour Party.
This is the person that was talking about clientelism on this side of the House.
It is a pity the Deputy's party did not put something into the north side of Dublin in 20 years.
Let us have no more interruptions from either side of the House. The Member in possession should be allowed to proceed without interruption.
The local development fund has been largely spent by one Minister of State at the Taoiseach's Office on his own constituency. The Comptroller and Auditor General was highly critical of the absence of any analysis of projects submitted or evidence that criteria were being adhered to, with tax clearance procedures being ignored, and grants paid to projects prematurely in breach of the Department of Finance guidelines. That is a pretty comprehensive indictment of any Member of this House.
It is a resigning matter.
I hope the Deputy can prove that.
The Minister of State, a former chairman of the Committee of Public Accounts should explain himself to the Dáil.
We have a cavalier Government and Ministers exercise no discipline with public money. Some of its members regard the Exchequer and the taxpayer as a bottomless pit, as an inexhaustible re-election fund that can be raided at will.
Deputy Woods pulled cheques from every pocket wherever he went.
The extent of social welfare fraud has increased, not surprisingly, under Deputy De Rossa as Minister. It is inexplicable that the live register should have started to rise sharply five months after he came into office when the economy was continuing to grow strongly. The Minister's political standards were well displayed last year, when he confined the old, a group from which his party gets no votes, to a miserable 2.5 per cent welfare increase.
All of this is part of the context in which we look at RPT. Its abolition at a small cost to the Exchequer would provide a clear signal that we intend to tackle the high levels of taxation which are still crippling this country's economy. Its yield does not go to local government, so that is not really relevant. I warned the Government, and the parties of the left in particular, not to think up new ways to fleece the public after the election, something at which they are looking already. In particular, further tolls on the Dublin ring road are not acceptable to this party and we are holding the Minister for the Environment personally accountable for any toll imposed by the National Roads Authority.
Fianna Fáil proposed them before.
If Ireland is to sustain rapid economic growth, which we on this side of the House have worked on successfully to create jobs for the unemployed, we must start tackling the high level of public debt which is costing the taxpayer roughly £2.3 billion per year. Revenue growth from increased activity and employment will also help us to reduce and eliminate taxes. I look forward, as a result of the efforts of the Opposition parties in this House, both Fianna Fáil and the Progressive Democrats, to the exertion of the necessary pressure to see that this is the last year of RPT.
It is a pity the Deputy did not think of it a couple of years ago.
If not, I look forward after 14 years of the RPT, which was first introduced by a Fine Gael Taoiseach and supported by the Labour Party in several Governments——
And doubled by Fianna Fáil.
Sustained by Fianna Fáil.
Doubled by Fianna Fáil.
Deputy Sheehan, please desist.
Cabinet confidentiality stops me from giving the full story about RPT but I ask the Deputies of the left to go back and check the facts.
Put a question to the Minister for Finance.
What was the last decision agreed before the budget in which we changed the thresholds——
Cabinet confidentiality.
Government responsibility.
——and who was trading for what? What was the other item in the trade which was in Fianna Fáil, would not accept? If the Labour Party had got its way, every trade union would have been raided through its pension fund.
I move amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann notes the speedy action taken by the Government in the 1995 budget to reverse, as promised in its programme of renewal, the changes in the income and house value thresholds for residential property tax introduced in the 1994 Finance Act and the commitment also given in the Government's programme to review the future of the tax in the context of the professional study on local government financing, and welcomes the continued steady progress made by the Government in improving the tax system."
I welcome this opportunity to respond on behalf of the Government in this debate. It is necessary to set out some of the facts on residential property tax and how this Government has alleviated this tax, and on the substantial tax reforms and other tax reductions introduced in the last two budgets. It is important to set this debate in the context of overall tax policy since this is what matters in the end and determines the tax burden on the community as a whole.
Residential property tax was introduced in 1983. The tax is charged at the rate of 1.5 per cent on the excess of the market values of all residential properties owned by a person over an exemption limit. The house value exemption limit was £65,000 in 1983. In addition, the tax is only payable where the household income exceeds a gross amount, which in 1983 was set at £20,000. Both these thresholds were indexed for years after 1983 and the respective figures for 1996 are £101,000 and £30,100. The tax is payable on or before 1 October of each year on the basis of property values and incomes as at the previous 5 April. The tax may also be paid on an instalment basis.
While the issue of taxation of property has always been a controversial one in Ireland, the present controversy can be said to stem from the decision announced in the 1994 budget to reduce the house value and household income threshold to £75,000 and £25,000 compared with £91,000 and £28,100, and to replace the flat 1.5 per cent rate with a new rates structure of 1 per cent, 1.5 per cent and 2 per cent. This decision, which was introduced by the then Minister for Finance and current leader of the Fianna Fáil Party, Deputy Bertie Ahern, more than doubled the number of taxpayers in the RPT net to 38,000.
He has bailed out.
Of course. The truth always hurts. The sheer brass neck and political opportunism of both the leader of Fianna Fáil and his finance spokesperson——
Fine Gael went into Government with Democratic Left.
——to come into this House today and put on the record that to which we have just listened takes the biscuit. It demeans the dignity of the leader of Fianna Fáil to ignore the role he had to play in doubling the number of taxpayers who were brought into the RPT net. He doubled the tax itself and he reduced the thresholds so that more people were brought in.
That was the Labour Party.
For the Fianna Fáil spokesperson on finance and the leader of the Fianna Fáil Party to act like Pontius Pilate and blame the Labour Party, telling us to check the Cabinet papers, demeans the dignity of their present position.
Look at the new cosy cartel.
It is the truth.
For Fianna Fáil to blame the Labour Party for the 1994 increases, attack the Tánaiste's office, attack the Minister for Arts, Culture and the Gaeltacht——
The Comptroller and Auditor General did that.
——and accuse the Labour Party of cronyism and favouritism demeans their offices. Labour Party supporters should listen carefully to Fianna Fáil's message as its party political opportunism unrolls. Listen to the message Fianna Fáil is giving the Labour Party.
Begging for transfers.
It is on the record tonight and it demeans those spokespersons on the Fianna Fáil front bench. I expected more, particularly of Deputy Charlie McCreevy. He was a man who always spoke truth——
I certaintly did tonight.
——and called a spade a spade even when it was uncomfortable. He has departed from his normal standards.
I have said it before both inside and outside the House.
Deputy McCreevy, please desist.
The Minister is provoking us.
I said it on every budget since 1983.
Deputy McCreevy, the level of interruption is far too great. The Member is possession is entitled to speak without that kind of interruption. The Minister, please, without interruption from either side.
Deputy McCreevy is the finance spokesperson and he called the RPT "a daft concept". The Fianna Fáil Party was in Government for seven years from 1984 to the end of 1994 and did absolutely nothing about this so-called "daft concept" except double the numbers which were brought into the net. Let that stand as a testimony to its interest in the tax system.
I said it on every budget since 1983. It was daft then and it still is.
Let that be the record of the political opportunism of the debate tonight. That is Fianna Fáil's concern. They did nothing for seven years. They doubled the tax, doubled the numbers who were brought into the net and lowered the threshold. That is the Fianna Fáil record on RPT.
Is Fine Gael in favour of this tax?
The great proponents of tax reform, the Progressive Democrats Party, during their period in Government with Fianna Fáil also showed a distinct lack of interest in, or concern for, those taxpayers caught in the property tax net.
Their new found concern has been cultivated only since it hit the Opposition benches, particularly in recent times with a general election year approaching. The programme, A Government of Renewal, contained the following commitment to reverse the 1994 changes in residential property tax:
It is proposed that the changes to the income and house value thresholds in the Residential Property Tax in the 1994 Finance Act will be reversed in the 1995 budget. The future of this tax will be considered in the context of the professional study on local government financing.
In his first budget in February 1995, the Minister for Finance, Deputy Ruairí Quinn, delivered on that commitment when he announced that the new thresholds for 1995 would reflect the 1993 thresholds indexed to 1995 values and the rate of tax would revert to 1.5 per cent. Accordingly, the 1995 Finance Act reverted to a flat 1.5 per cent rate, increased the property value exemption threshold to £94,000 from £75,000, to which Fianna Fáil had reduced it, and increased the household income threshold from £25,000, to which Fianna Fáil had reduced it, to £29,500. It further provided that those threshold values will continue to be index linked in future.
As regards the second part of that commitment, the Minister for the Environment has already published that professional study last June and is seeking to advance the debate in this area in a coherent manner. In other words, within 18 months of this Government taking office a study has been commissioned, completed and published. For seven years Fianna Fáil did nothing but double the rate of tax and the number of taxpayers taken into the net.
The threshold changes in the 1995 Finance Act halved the number of taxpayers paying residential property tax compared with the previous year. In 1995 the Minister retained all of the special adjustments introduced in 1994 to meet certain anomalies in the system which had been identified as causing hardship to certain specific categories of taxpayer.
Those adjustments helped eliminate possible hardship for elderly or incapacitated owner-occupiers of houses coming within the scope of the residential property tax. They cater for where a houseowner needs to bring in a carer on account of his or her incapacity or, if widowed, to care for dependent children. They also ensure that no household will be brought into the residential property tax net simply on account of caring for an elderly or incapacitated person. They further provide that no residential property tax charge will arise from alterations made to a property because one of the people living in the house is permanently incapacitated. Another provision was to give the Revenue Commissioners discretion to deal with possible hardship cases which are not covered by the various specific reliefs.
These adjustments are in addition to two significant reliefs — the child relief and the marginal relief — which were introduced in 1983. Child relief substantially reduces the actual charge for all families with dependent children. All residential property tax bills are reduced by 10 per cent for each eligible child in a household. Where there are four children the charge will be only three-fifths, or 60 per cent, of the full figure.
There is also an income related marginal relief which serves to greatly reduce the residential property tax charge for people whose income is relatively close to the income threshold. Marginal relief now applies where household income is up to £10,000 above the income threshold. This means that in 1996 marginal relief is available up to £10,000 above the income threshold. This means that in 1996 marginal relief is available up to £40,100. For example, in a case where household income is £35,100 only half of the full residential property tax liability is payable. If the householder is aged over 65, he or she is eligible for marginal relief if the household income is up to £15,000 above the income threshold, that is up to £45,100 in the current year.
That is written in the tax book.
As already stated, the present value exemption threshold is £101,000. If on 5 April 1996 the property was worth less than that amount there is no tax liability regardless of the size of household income. If two or more people own the same property then the value of the property and the valuation exemption threshold is divided between them. Equally, regardless of the value of the property, there is no liability if household income is less than £30,100 in the 1995-96 tax year. The income of anyone who is not an owner and who is aged 65 or over, or who is permanently incapacitated is excluded.
Exemptions also apply in a number of other categories. If any of the owners is over 65 household income is limited to that of the owner. The income of anyone else living in the property is excluded.
I wish to raise a point of order. This is a private members' motion about the Government's intentions relating to residential property tax. The Minister of State is treating us to a dissertation on how the tax works in practice. We all know that.
I have not departed from the motion. It is a time waster and I urge the Chair——
There is no need to urge the Chair.
The Minister of State is the one who is wasting time.
If any of the owners is permanently incapacitated, the income of anyone — who is not an owner — living in the property due to the medical condition of the owner is excluded. If the owner is a widowed person, the income of anyone — other than the owner — living in the property due to the owner having dependent children is excluded.
It is important to remember that the market value for tax purposes may be reduced by the amount of value attributable to alterations or improvements provided that the changes were necessary to accommodate or facilitate an incapacitated resident and the incapacitated person usually lived in the property during the relevant tax year.
On the value exemption threshold which stands at £101,000, the value threshold is indexed to the new house price index, a figure compiled and published by the Department of the Environment. While this index may not fully capture the full range of price movements in the house property market, it is probably fair to say that one index will not achieve this. Nonetheless, it has been this Government's policy to uprate the thresholds to maintain the real value of the thresholds as far as possible and not to down-rate or decrease them as Fianna Fáil did in 1994.
Given the thresholds and the range of reliefs available it is all the more strange that residential property tax appears to have generated a mythology all its own. Media coverage and Opposition comment sometimes combine to give the impression that residential property tax is placing an onerous obligation on the general body of taxpayers. Nothing could be further from reality. The number of taxpayers paying residential property tax in the last year was just under 20,000 — down from 38,000 which Fianna Fáil brought into the net — or about 2 per cent of taxpayers. It is important to keep residential property tax in some perspective. This year the tax will be paid by some 23,000 households. This represents just over 2 per cent of the total stock of approximately 900,000 owner-occupied houses in the country. More than half of those 23,000 will be able to reduce their tax bills by claiming either marginal relief — where household income is between £30,000 and £40,000 — or child relief — a 10 per cent reduction for each dependent child. By way of example, the residential property tax payable for 1996 on a £120,000 house — where the income is £35,000 and there are two dependent children— will be £111.72.
Some commentators have indicated that the average residential property tax bill is in the region of £500. Given the distribution of residential property tax payers, this statistic is erroneous. In 1995 — figures are not yet available for 1996 — 30 per cent of RPT taxpayers paid less than £100 and 71 per cent paid less than £500.
There has been much overstatement on the incidence of residential property tax in the media and especially the property pages. We can all understand what the motivation in the property pages might be. One article suggested people living in what was termed very modest homes could pay as much as £1,500 to discharge their residential property tax liability. To have such a liability the house would have to be valued at in excess of £201,000. While undoubtedly the occupants of such a house may not be numbered among the rich, this is not such a modest house when it is considered that the average house price in Dublin at the end of March 1996 was, according to the Department of the Environment housing bulletin, £71,618 for new houses and £73,615 for second-hand houses.
It is sometimes claimed that rapid increases in house prices in parts of Dublin are pushing many householders into the residential property tax net. Revenue statistics confirm that a higher proportion of residential property taxpayers reside in the greater Dublin and other urban areas.
Householders in Dublin pay approximately three-quarters of all residential property tax. While this is unfair it is not surprising, as it reflects the reality that most of the country's valuable residential property is concentrated in the capital city. In addition Dublin incomes tend to be higher than the national average which means that less households can claim income exemption or marginal relief.
In any national property tax based purely on values it is inevitable that householders in high value areas will pay a disproportionately higher share of the overall tax. This is not unique to Ireland: Londoners or Parisians also pay a disproportionate share of UK or French property taxes.
I will circulate this speech.
Outside Dublin, Galway pays a higher share of RPT, based on population, than other cities. Again this reflects the fact that Galway is a high value residential area. If we are to have a property tax then open market value is surely the most equitable basis for the charge.
They will love this in the south-east.
The Deputy should please listen — he might learn something.
I know more about it than the Minister.
Please, Deputy Ryan.
It is impossible to avoid a geographical imbalance for any value based property tax.
Discussions on RPT need to be set in the context of the significant reforms of the tax system undertaken in the past two years by the Government which have seen major improvements in the tax burden borne by the general body of taxpayers. Ireland has for some years been undertaking a programme of tax reform with the aim of increasing competitiveness and growth, thereby contributing to the creation and maintenance of employment. Deputy McCreevy should take note of this point. The primary focus has been on reducing the level of income tax while implementing base-broadening measures, particularly in the area of corporate taxation. I doubt Deputy McCreevy would disagree with that. This strategy of concentrating on income tax reduction has also been guided by the desirability of achieving moderate wage developments through a consensus approach with the social partners.
In its Programme for Renewal the Government commits itself to continuing the process of tax reform. The programme stresses that reform should favour the incentive to work; tackle the poverty trap; aim to reduce the tax wedge and encourage enterprise development and growth. I doubt if there could be any argument on this.
In recent years significant progress has been made in improving the income tax system. The standard rate was cut from 35 per cent to 27 per cent while the top rate was cut from 58 per cent to 48 per cent.
By Fianna Fáil.
The number of tax rates was reduced from three to two.
Who reduced them?
Since the beginning of 1994 when the Programme for Competitiveness and Work was agreed the effort to reduce the tax burden has continued. In 1994 the 1 per cent income levy was removed, the low income threshold for the health and employment and training levies was introduced, the marginal relief rate of tax was reduced from 48 per cent to 40 per cent and personal allowances and tax bands were widened.
In line with the Programme for Renewal a central tenet of the last two budgets has been to reward work by increasing take home pay.
Why is the no sign of a Fine Gael Deputy from Meath?
They trust me to do the job for them.
That will no longer be the case after they read this.
The 1995 and 1996 budgets have confirmed the Government's policy to continue, within responsible budgetary parameters, the process of tax and PRSI changes as an important element in overall strategy. Over the two budgets combined, personal allowances have been increased by close to 13 per cent while the standard income tax band has been widened by £1,200 in the case of a single person and by £2,400 for a married couple. This is an increase of close to 15 per cent, which more than compensates for the reduction in mortgage interest and VHI reliefs.
They did away with the PRSI allowances.
These increases are significantly above the expected rate of inflation of under 4.5 per cent for the two year period.
They did away with mortgage interest relief.
Order, please.
If the Deputy listened he might learn something.
I have not learnt anything from the Minister.
The last two budgets also focused on the lower paid by increasing the general exemption limits by 8.3 per cent, thereby taking a significant number of workers out of the income tax net.
The Minister of State is misleading the House by telling half truths.
Please, Deputy.
A new PRSI-free allowance was introduced in 1995 and increased to £80 per week this year for most employees. This measure, a unique new feature in the social insurance system, means that in the case of most workers the first £80 of their weekly wage is disregarded when calculating their PRSI contribution.
This allowance is of particular benefit to those on lower pay as it gives valuable relief to those who are already exempted from income tax and who would not benefit from further increases in either the exemption limits or personal allowances. Furthermore, the threshold for payment of the health and employment and training levies has been increased to keep pace with inflation. The combined effect of these measures has been to increase take home pay, particularly in the case of lower paid workers, thereby making employment more attractive. Equally important, these measures will ensure that we continue the progress being made in reducing the employees' average tax burden and the overall tax wedge. I will illustrate this point with a number of examples.
In 1994-95 the average tax take, including income tax, PRSI and levies, for a married couple with one earner and two children earning the average production wage was approximately 23.2 per cent. This figure is expected to fall to 21.6 per cent in 1996-97. For a single person on the same wage level the average tax take in 1994-95 was approximately 30.9 per cent, and this figure is expected to fall to approximately 28.7 per cent in 1996-97.
Did the Minister get the correct script?
In 1994-95 the tax wedge, that is the tax take including employers' PRSI, for a married couple with one earner and two children, earning the average production wage was approximately 31.6 per cent. The tax wedge, after allowing for tax increases, is expected to fall to approximately 30 per cent in the tax year 1996-97. For a single person on the same level of income, the tax wedge is expected to fall from 38.4 per cent in 1994-95 to under 36.4 per cent in 1996-97.
These figures give a clear indication of the continued and steady progress being made in the income tax and PRSI areas and refute statements made by those who do not understand or seek to minimise or understate the Government's achievements. Naturally one of the Government's aims is to achieve greater progress and it is our goal to build on the substantial improvements which have been made in the past two years. If tax changes are to be pursued it is best to do so on a sustained basis. A succession of consistent and affordable tax reductions from year to year can, over a relatively short period, make a substantial difference.
A further aim of the Government is to encourage the development of enterprise to generate and maintain employment.
The Government is not doing that.
To this end the lower rate of employers' PRSI was reduced from 9 per cent to 8.5 per cent and the income threshold for the higher rate was increased from £173 per week to £250 per week, an increase from £9,000 to £13,000 per annum. This represents an increase of approximately 45 per cent. In addition, the main rate of employer contribution was reduced from 12.2 per cent to 12 per cent.
In this year's budget the Government introduced a new reduced rate of corporation tax which will apply to all businesses liable at the standard rate. The new rate of 30 per cent applies from 1 April this year to the first £50,000 of taxable income in the accounting year. While all companies will ultimately benefit from gradual reductions in the standard rate, this year's measure provides proportionately greater benefit to the small business sector in recognition of the fact that it has shown the capacity to create substantial additional employment.
Some people will ask the relevance of this to RPT. It is extremely relevant. It is important that the overall burden is reduced with the clear strategic goals of rewarding work, promoting employment and seeking greater tax equity.
That does not underpin the Government.
The success of this strategy is reflected in economic growth.
That has nothing to do with Fine Gael.
The performance of the economy in recent years has been impressive both in absolute terms and compared with the EU average. Economic growth averaged 4.25 per cent over the five years 1991-95 compared with an average EU growth rate of 1.5 per cent. During the same period employment here grew by more than 1.5 per cent while it declined in the EU. Our economic performance over the past two years has been striking, with average annual GNP growth of 7.4 per cent, three times the EU rate. At the same time inflation and Government borrowing have been better than the EU average. This year we expect to see GNP growth of at least 6 per cent compared with an average growth rate of approximately 1.5 per cent in the EU. Yet despite this strong growth, inflation remains moderate at 1.5 per cent. The strong growth in employment and consumer spending this year is reflected in buoyant tax receipts which have resulted in an Exchequer surplus of £185 million for the first three quarters of this year, as announced this afternoon by the Minister.
It is worth looking at the key factors which have contributed to our strong performance. They are, first, the prudent fiscal and economic policies adopted by——
Fianna Fáil.
——successive Governments since the mid-1980s — I can be fair and realistic; second, the consensus among the social partners on the broad parameters of policy — low budget deficits, moderate pay-nominal pay increases to maintain competitiveness, boosted where possible by tax and PRSI reductions to ensure real increases in take home pay and, third, low interest rates which are in part the reward for these prudent policies. It is these low interest rates and rising house prices which have helped the property market and brought the focus onto RPT. Mortgage interest rates are some 4 per cent lower today than they were when Fianna Fáil and the Progressive Democrats parties were in Government. This is a saving of approximately £2,000 per annum on a £50,000 mortgage. These are real savings to households.
What has that to do with RPT?
The picture for continued economic growth is also promising. Economic progress has been achieved while adhering to the fiscal criteria set down by Maastricht and this year will be the eighth year in succession in which Ireland has satisfied these criteria. This is a consistency of budgetary performance which few if any member states can equal. Ireland and Luxembourg are the only member states judged not to have an excessive Government deficit under the Maastricht guidelines. The policy agreement A Government of Renewal indicated that the future of RPT will be considered in the context of a professional study on local government financing.
That is cancelled.
The policy agreement also contained a commitment that "the Government will immediately commission a professional study to see how a fair, equitable and reasonable system of funding can be introduced". That commitment has been honoured and the Minister for the Environment published the consultant's report on 27 June, 1996.
Nothing will be done before the election.
The Minister also published a paper on the organisation of local government, which appears to have been missed by Fianna Fáil, entitled Towards Cohesive Local Government — Town and County.
We missed the White Paper.
To progress the funding matter, approaches have been made by the Minister for the Environment to the two main Opposition parties in the belief that the subject would be best addressed on an all-party basis. The Minister will follow up these approaches shortly. Pending discussion between the parties it would be premature to speculate on the format of any joint approach to the issue should this prove acceptable to the parties. If agreement on a consensus approach cannot be reached the issue will be addressed in the context of the strategy statement.
The Minister for the Environment proposes to launch a strategy for the renewal of local government by the end of the year that will address the key issues of local government both at strategic level and by way of a planned action programme with clear objectives. The issue of funding will be included in this strategy statement.
The timing of this motion is most interesting. Fianna Fáil was in Government for seven years and did nothing to alleviate a "daft concept", to quote Deputy McCreevy. For seven years the party accepted it in Government and, in fact, reduced the threshold, doubled the numbers in the net and doubled the tax in 1994.
This was the party of tax reform.
Labour's price for staying in Government.
Persons affected by RPT are required to make a return with any tax due to the Revenue Commissioners by 1 October. The motion, therefore, is irrelevant to all diligent taxpayers this year. The effect of the motion, if adopted, would be to benefit non-compliant taxpayers at the expense of the compliant. Perhaps that is what the proposers intended in view of their tax amnesty when Deputy Ahern was Minister for Finance. However, I will give them the benefit of the doubt. I ask the House to support the Government's motion.
I wish to share my time with Deputies Ryan, Cullen and O'Dea.
Is that agreed? Agreed.
I thank the Minister of State for her worthwhile history of the changes in taxation over recent years and for admitting that the most significant ones were made under Fianna Fáil administration when income tax was reduced from 35p to 25p at the lower rate——
Deal with the motion.
——and from 58p to 48p at the higher rate.
The Deputy's party doubled the tax.
It doubled the number of people affected by it.
Deputy O'Hanlon without interruption.
When the Minister of State talked about the achievements of her Government she said that the main rate of PRSI had been reduced from 12.2 per cent to 12 per cent for employers. That is a total of £20 in every £10,000 and I doubt that the Government should boast about that.
What was interesting about the Minister of State's history of taxation was that she said little about policy on the residential property tax. Perhaps that is understandable. When there are three parties in Government with such differing ideologies one should not expect a co-ordinated approach to this issue.
Does the Deputy think that his party would turn down the chance of being part of a three party Government? It would accept it in the morning.
Our party has made it clear over the past 12 months that it will abolish the residential property tax. Was the Minister of State speaking for herself and the Fine Gael Party or for the Labour and Democratic Left parties? They are not represented in the House at present to give her support, which is rather disappointing.
Abandoned again.
It appears that there is full support in the Minister of State's party for the residential property tax and that it does not have any intention of changing it. My colleague, Deputy O'Dea, was a little unfair in asking about Government policy on this issue because it would be hard to know, having regard to the three parties in Government and——
Watch this space.
My time is limited. If I wished to sum up the issue of residential property tax, I could do no better than the Minister of State at the Department of Enterprise and Employment, Deputy Rabbitte, when he addressed this House on 23 March, 1994. He stated that the tax was anti-Dublin, anti-urban and anti-family.
That year Fianna Fáil doubled the tax rate and the number of people in the net.
I presume he has not changed his mind and that he will come to the House tomorrow night to vote in favour of the Fianna Fáil motion.
Fianna Fáil doubled the tax.
Deputy O'Hanlon without interruption.
I do not wish to exclude the Minister of State's colleagues in Wexford. Deputy Yates was very critical of this tax. Addressing the House on 23 March, 1994, he gave a good example of the effect of the tax. He referred to an unfortunate person who might have had to come to work in Dublin years ago and, having bought a modest house, now found himself paying £850 residential property tax while somebody with a much larger house — the Deputy selected Letterkenny as an example — with a swimming pool and tennis court would only pay £240. The Deputy was totally opposed to the tax in 1994, as was Fine Gael——
The Deputy's party did nothing to redress it.
They wanted the tax to be abolished on the basis, which we all accept, that it discriminates against people in larger urban areas.
The Deputy's party doubled the tax take.
Deputy O'Hanlon without interruption.
In 1995, the tax take was £9.5 million of which £7.3 million was collected in the Dublin area. We must accept that the tax discriminates against people living in the capital and that the point made by Deputy Yates was valid.
The Deputy's party did not do anything to redress it.
House prices have increased by 15 per cent in Dublin and this has brought a number of people into the residential property tax net who would not otherwise be included. Unfortunately, people have no control over the increase in house prices. The Government should encourage people to have houses that are adequate in size and comfort to rear their families. The State gets sufficient tax take from the house through tax on construction materials and building and from the 6 per cent stamp duty on second-hand houses. The case for the abolition of the tax has been well made tonight.
I have quoted Deputy Rabbitte's views on the tax. The Labour Party's view is more interesting. Eight members of that party were quoted in The Irish Times of 24 September as being against the tax. They included Deputy Eamon Walsh who, two years ago, spoke in favour of the tax in this House. All these views help me to understand why the Minister of State did not deal with residential property tax in her contribution and instead gave us a resumé of taxation during recent years.
I will not omit the opinions of the Minister of State's other constituency colleague. The Minister for the Environment, Deputy Howlin, last week abandoned his plans to publish the White Paper on local government reform. Was that linked to this motion? I was interested to hear the Minister of State's comments on the timing of the motion. Even if this motion were passed, it would have no relevance for people who had or had not paid their residential property tax. If the system were changed tonight the Government could make arrangements to ensure equity for all taxpayers, including those who had paid by 1 October and those who had not.
A significant aspect of this debate is that this is the first time since I became a Member of this House that Private Members' Business has been given such importance. I am glad to see that. It could be implied from the final paragraph of the Minister of State's speech that if the Fianna Fáil motion was passed tomorrow night, this measure would take effect immediately. I would like to believe that would happen. Many Members support the motion.
When the Deputy had the reins in Government he should have ensured that happened and not preach from the Opposition benches now.
I would like Members, including Deputy Sheehan, to support our motion. At the rate house prices are increasing, this could be a serious issue in West Cork in the near future.
The Deputy was in Government for seven years.
I listened with interest to the Minister. It is ironic that I am here with my colleagues in Fianna Fáil, the Minister of State is here with her colleagues in Fine Gael and the Progressive Democrats were here earlier, but those in the left who support RPT are not here. The parties who do not support RPT have more than 120 seats in the House. Those from the left are probably up in their offices laughing while listening to the debate. This is a joke. They foisted this tax on Members in various coalitions and are holding firmly to their view. The tail is wagging the dog. They did it while we were in Government and they are now doing it in this Government.
I do not believe the Minister of State agrees with what she said tonight. We had to march in here on a previous occasion and vote for this tax even though we did not support it. It is grossly unfair and should be abolished. I verified with two auctioneering firms today that a house that was bought in my constituency five or six years ago for £100,000 is now worth approximately £250,000. If the owners of such a house have an annual income of £40,000 and do not have children, they must pay RPT at the rate of £2,200 per annum after paying all their other taxes. That does not make sense.
Why did the Deputy's Government bring more people into the net in 1994?
The Deputy, without interruption, please.
We all agree it is an unfair tax and it should be abolished.
Your party was in Government for seven years and increased the number in the net. This is political opportunism.
It is a grossly unfair tax and should be abolished.
You did nothing about it when in Government.
The Deputy without interruption please.
We have given a commitment to abolish it.
We must not have repeated interruptions. If the Deputy in possession addresses his remarks through the Chair, rather than across the floor, it would be less provocative.
I am not being provocative, I am merely stating that I know the Minister of State agrees with Members on this side on this matter. This is a grossly unfair tax and it should be abolished. The Progressive Democrats and Fianna Fáil have given a commitment to abolish it. The Taoiseach, Deputy Bruton, and the Minister for Agriculture, Food and Forestry, Deputy Yates, said it is grossly unfair. Why are we being held to ransom by the left.
We are not being held to ransom by the left. We have a consensus Government that operates effectively.
When the Deputy's party was in Government with the Progressive Democrats and the Labour Party, it said nothing about it.
Deputy Ryan, without interruption, please.
Let the Labour Party note the record.
Are we allowed speak in this Assembly?
Deputy De Rossa said he will not abolish RPT unless water charges are abolished. I expected him to say that. He is sticking to his principles.
The Deputy would get rid of every charge in an effort to get back into Government.
Deputy De Rossa comes from a very hard left background and it is one of the last principles he can hold on to. He is now in Government with Fine Gael and has changed his philosophy so much that there are only a few principles he can hold on to. He believes he will have some credibility if he can retain the RPT. If he is not successful in doing that, he wants to abolish water charges. They are not connected.
They are connected.
The RPT is a grossly unfair tax on individuals. If this were happening to the farming community the Minister of State would roar from the highest rooftop.
What am I justifying tonight?
The Minister of State is claiming it is acceptable for people to pay this tax.
I am not.
Yes, she is. There is not one Fine Gael member from Dublin in the House tonight because they cannot stand over what the Minister of State has stated.
The Deputy did not listen to what I said.
The property tax should be abolished in the next budget and that should be the end of it.
The Deputy did not listen to a word I said. Perhaps he did not understand it.
Will we be allowed speak in this Assembly without interruption please?
I call Deputy Cullen and I do not want interruptions from either side of the House. This is a disgraceful session.
If the Deputy——
No, Deputy Sheehan. If this was not Private Members' Time, which is very precious, I would have no hesitation in suspending the proceedings.
The RPT is a vindictive, unsavoury and discriminatory tax which epitomises left wing politicians and their ideologies. There is no better means of encapsulating in one tax the ideologically driven parties of the left than in the RPT. It discriminates against hard working people who are probably the greatest supporters of the State in terms of the tax they already pay. It adds insult to injury to impose RPT on them.
It was interesting to note the Minister of State's lengthy dissertation on tax, while her comments on tax reform consisted of some ten sentences of nonsense. That indicates the inability of this Government to deal seriously with tax reform. The fiscal policies put forward by Fine Gael in Opposition were abandoned when it went into Government. It also abandoned the Department of Finance to the Labour Party which dictated policy every time those parties were in coalition. In the period from 1983 to 1987 it virtually bankrupted the country.
What was the Deputy's fiscal policy in the past?
Deputy Sheehan has been incapable of making a sensible contribution tonight. The best thing he could do is sit down, be quiet and support his Minister of State. He does not have much to say.
What was the Deputy's policy when he was with his previous colleagues? He supported the tax.
The tragedy of the current Government in terms of its spending——
I suppose Deputy Cullen was not a member of Fianna Fáil in 1994.
Will our party be allowed contribute to the debate?
Was Deputy Cullen a member of Fianna Fáil in 1994?
The Minister of State should restrain herself.
The pain that members of the Fine Gael Party feel tonight is evident from the way they have been trying to shout down Members in Opposition who are making reasonable points.
We are bringing Members opposite back to reality, we are not shouting them down.
The manner in which they are shouting us down was demonstrated in the Minister of State's speech when she did everything to avoid the motion before the House. Rather than face the reality we were brought on a merry-go-round of nonsensical diatribe about Fine Gael policy.
The reality is that Fianna Fáil doubled the numbers in the RPT net in 1994.
The Minister of State's arrogance is disgraceful.
Let us hear the last two minutes of the Deputy's contribution without interruption.
In the last week or two a Labour Minister, Deputy Howlin, having printed his glossy brochure on local government reform with great fanfare, abandoned the notion of introducing a White Paper on local government reform. That is the type of cynicism the Labour Party and Democratic Left have adopted at every opportunity in Government.
Fianna Fáil should not talk about cynicism, this is political cynicism at its worst. For seven years it was in Government and doubled the number of people in the RPT net. The public should recognise that cynicism.
The Minister of State will not shout me down. She may try it with her colleagues, but she will not do it to me. The influence of the left wing parties, supported by Fine Gael, will be brought home at the next general election because the public is sick and tired of the left wing dominance of the policies of this Government, which has been hidden by the good fiscal policies adopted by this party during its period in Government. They will not get away with this at the next election.
That included doubling the number in the RPT in 1994.
The Minister's conduct was a disgrace.
