Dáil Éireann debate -
Thursday, 3 Oct 1996

Vol. 469 No. 4

Private Members' Business. - Residential Property Tax: Motion (Resumed).

The following motion was moved by Deputy McCreevy on 2 October 1996:

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.

Debate resumed on 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.".

—(Minister for Finance).

Mr. Lenihan

My party tabled this motion for the consideration of the House because of public anger about the property tax and water charges which arises from the fact that the general body of taxpayers believe they are already paying through the nose in income tax.

I wish to develop the argument about double taxation, a phrase often bandied about in this argument, which requires analysis. Approximately 80 per cent of Irish homes are owner occupied, representing the highest number in any member state of the European Union. The imposition of property tax and service charges involves taxing the same body of people who are already paying income tax. That is one of the great weaknesses in the argument put forward by various economic commentators down through the years who have made the case that we should have more extensive property tax arrangements here. The reality is that if property taxes are extended it will involve taxing the same base of people who are already paying income tax. The comparison between here and continental countries made by the Minister of State, Deputy Doyle, last night when considering the property tax issue is fallacious. Because we have a far higher incidence of owner occupation of the family home than any other member state of the European Union, the introduction of a property tax on the family home is, in effect, a form of double taxation. As a matter of history, most Irish people have had a strong itch to buy and own their home — to invest in its bricks and mortar. It is a form of confiscation to introduce a tax on the family home when dealing with taxpayers who are already paying a substantial amount of income tax.

As pointed out by my party spokesperson on finance last night, the double taxation arguments is reinforced in the case of Dublin by the fact that in the year ending 5 April 1994 75 per cent of the receipts of the residential property tax were paid by persons living in Dublin city and county and in the year ending 5 April 1995 77 per cent of those paying that tax resided there.

Since the commencement of the debate an announcement was made outside the House by Deputy Broughan yesterday evening that it is now Labour Party policy to eliminate this tax. I am very glad to hear that and in a sense it would appear that our motion has had a response from the benches opposite. Although Deputy Broughan does not hold a Government position, apparently it is stated Labour Party policy that this tax should be eliminated. In that sense to press the case much further might be otiose because it is accepted on the benches opposite that the property tax should be eliminated.

I was somewhat concerned to hear the argument made by the Minister of State, Deputy Doyle, last night that there was nothing wrong with the fact that the population of Dublin and Galway had to bear this tax more than people in other parts of the country because it was their good fortune to live in houses that have high capital values. The people who must pay this tax are already paying income tax and substantial amounts of it if we are to believe the receipts published by the Commissioners — that highlights the double taxation argument.

An attempt has been made by the Government parties to relate this subject to the question of local government funding. The residential property tax has always been an item of central Government receipts. The receipts from the residential property tax have never been allocated to local authorities, but the relationship between it and local government funding has arisen because I assume the Democratic Left and the Labour Party are concerned to eliminate service charges as well as the property tax, but that would involve separate considerations. I am opposed to service charges in the Dublin area and would like to see them eliminated, but the considerations that would have to be taken into account in that regard are somewhat different because an adequate funding base must be established for local government. It was made clear by my party leader yesterday evening that Fianna Fáil is prepared to provide that base, but it must come from within the existing tax system.

I urge the Government to accept our motion on the basis it is apparent from the Labour backbenchers that in any event it is official Labour policy to dispense with this tax and, therefore, I do not see why there is opposition to the motion from the Government side. It appears to be agreed in this House that the residential property tax is an inequitable form of taxation and should be eliminated.

Mr. S. Brennan

The residential property tax contravenes the most basic tenets of taxation. As any student of taxation is aware, those tenets are that a tax should be equitable, transparent and efficient. When the residential property tax is measured against those standard tenets of taxation it is not transparent, efficient or equitable. Attempts have been made to make it more acceptable through exemptions and changes in the thresholds. Those contrivances simply highlight deeply embedded contradictions in the concept and in the tax.

The tax is a direct imposition on the most important and basic investment made by any of us here and by those whom we represent. Buying a house is the most important investment people will make in their lifetimes for themselves and their families. In many ways that investment in bricks and mortar will shape the way we live our lives and the manner in which we provide for and rear our families.

For many small businesses investment in bricks and mortar represents the only equity the owners of those businesses possess. Today the banks are less willing to take a charge on property as the basis for lending to small businesses. I welcome this greatly. When I established the task force on small businesses some years back it was of particular importance to me to ensure that the banks would not overuse the domestic home for the basis of lending for business purposes. The same logic applies to the residential property tax. Amid all the uncertainties and pressure of business the small business person's home remains the bedrock of their financial and emotional security. It has been said by Members opposite the residential property tax is a tax on speculation, but that is a nonsense. The tax impacts on many thousands of families who could not possibly be called speculators. More importantly, the Government must be aware that the way to deal with speculation is through sound macroeconomic and monetary policies, not through direct tax on the homes of families and citizens of this country.

For all those reasons our homes must be tax free zones of security and stability. It was never more important to us or to our people that they save and invest in their homes without having to worry whether such prudence and such a sensible approach will leave them less well off because of the additional burden of residential property tax. It is obvious from the operation of the tax that it is inequitable and, from what we have seen of its operation during the past few years, that it is a burden on those who save, take out mortgages and invest in their homes — it is a disincentive to do that. Whatever about the theory, the tax has not worked in practice. It has been inefficient, ineffective and has not brought in revenue. It does not meet the basic tenets of what a good tax should be — equitable, transparent and efficient.

We should also remember that RPT is an additional burden on families seeking to establish homes. It comes on top of the reduction in interest relief on mortgage payments and insurance. Those expenses combine to give rise to a situation where most householders are put to the pin of their collar to meet them. In that context, a tax on the family home does not make any sense.

There is also a constitutional aspect to this matter. If we believe that citizens have a right to establish homes for themselves and their families for their emotional and financial security — which is how we interpret the Constitution — and that we in this House have a responsibility to safeguard those rights, it is important for us to reverse the decision taken by this House to impose this tax. Residential property tax is an inequitable and socially damaging tax on homes and families. It is an unfair tax which we should remove.

There has been a great deal of discussion about who started what and who first introduced residential property tax. That debate can take place during the general election, towards which we now appear to be heading. It is important to realise that most people are under financial pressure in their daily lives to pay their mortgages, electricity bills and telephone bills and they do not need residential property tax on top of the other pressing expenses of running a family home.

Ms F. Fitzgerald

I wish to share my time with Deputy Eamon Walsh, Deputy Shatter and the Minister of State, Deputy Rabbitte.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. M. McDowell

Why does the Deputy not share her time with more people?

Ms F. Fitzgerald

I consider residential property tax to be a crude, anti-family and anti-Dublin tax. I call on this Fine Gael led Government to seriously question the future of this tax and I look forward to the proposals of the Minister for Finance in the January budget.

I wish to review the history of this tax and the Government's approach to it. When this Government took office it made two commitments on residential property tax. First, it promised to reverse the regressive changes introduced by the Leader of Fianna Fáil when he was Minister for Finance in 1994. Does that leader now expect the home owners of Dublin to fall for an advertising campaign by a party which a mere two years ago virtually doubled the number of taxpayers paying RPT and brought many home owners in Dublin into the RPT net? We changed the decision he made in our first budget in 1995. Secondly, we gave a commitment to review the future of RPT in the context of a professional study commissioned on local government. That study's report has been published and is the basis for the ongoing review of local authority financing and funding and the future of RPT.

We delivered on our first commitment and we are delivering on the second. By contrast, the Fianna Fáil party is now calling for the abolition of the residential property tax. This is the party which in 1994 reduced the valuation threshold from £90,000 to £75,000 and the income threshold from £30,000 to £28,000. In his last budget, the Leader of the Opposition brought approximately 18,000 extra taxpayers into the RPT net. My constituents might not like RPT but I credit them with more intelligence than the Opposition. They can see the difference between the soft words of the fancy advertising campaign today and the harsh actions of two years ago.

The Opposition has said that RPT is inequitable, that it is biased against Dublin taxpayers and that mortgages are not factored into it. It implies the Government is unaware of these problems or ignoring them but, of course, it is wrong. Why else did we give a commitment to review the future of this tax?

The study on local authority financing was completed and published earlier this summer. The results of that study are now being reviewed. There have been problems with local authority financing for many years. What did Fianna Fáil do about that? Within 18 months this Government has commissioned and published an independent study. In contrast, the Opposition, for the most transparent of motions, tabled this motion for the day after RPT returns were due. The Government did not rush into completing its review of local authority financing by the same date.

I look forward to considered proposals from the Government. However, it is important when reviewing the RPT to review the overall economic situation and to look at present economic growth, employment creation, low inflation and low interest rates. We must look at what happened to mortgages in the last few years. Many of my constituents remember the mortgage interest rates when Fianna Fáil and the Progressive Democrats were last in Government — they were 4 per cent higher than they are today. On a £35,000 mortgage, that represents a £1,400 saving annually — £125 per month — under the economy managed by this Government.

However, escalating house prices in Dublin are causing huge concerns about the range of houses whose net value continues to increase. That has to be taken into account when considering this tax. These are family homes and their owners, many of whom are on fixed incomes, do not intend to sell them to make a profit. With spiralling house prices, RPT becomes a very unfair tax which particularly affects Dublin.

The Government has honoured its commitment to the people and we await the review of local government financing. What trust can the electorate have in the alternative? Fianna Fáil, which had seven years in Government to do something about it, lowered the property value threshold to £75,000 and the income threshold to £28,000. I am confident this Government, led by Fine Gael, is committed to a comprehensive examination of the taxation situation, to reducing the tax burden of PAYE workers and to reviewing this tax in a comprehensive way.

Mr. E. Walsh

I am pleased to contribute to this important debate which affects many constituents, particularly in Dublin. We are talking about a taxation on wealth which is now threatening people with average incomes and houses. On Monday evening, Deputy Bertie Ahern looked ridiculous on the 6 o'clock news launching his party's Saatchi and Saatchi poster campaign. This debate is part two of the grand strategy of binning the property tax. The posters scream at us, but it is a pity he is the same Deputy who began the current property tax controversy in his 1994 budget by doubling the number of people paying RPT in one fell swoop.

I am in favour of the examination of the residential property tax in the context of an overall review of that tax linked with domestic service charges, which impact on considerably more people. Fianna Fáil is reluctant to be upfront on this issue as many of its councils have been happily collecting these charges for the last decade or so. In 1985 promises were made to abolish service charges. On its return to power, not only did it not abolish them, it increased them in every local authority.

Let Fianna Fáil explain to the electorate why it is determined to make one tax an issue at this stage while avoiding addressing others, in particular water charges. The electorate expect little from Fianna Fáil whose members are quite happy to cry about farmers one week, residential property tax the following one and about different issues as they arise. Deputy Cowen says Fianna Fáil is a national party. In effect what he means is that Fianna Fáil is determined not to do anything to offend anybody. Deputy McCreevy and Cullen have been moaning about public and social welfare spending while calling for a reduction in taxation, which equation could not withstand scrutiny.

Since the Minister for the Environment assumed office most local authorities have upgraded national and local county roads to a standard never before witnessed. This can be done only by finance raised through taxation.

The Fianna Fáil Party must be pleased with its expensive launch on Monday last which warranted a six-inch column in The Irish Times in which Deputy McCreevy was quoted as referring to the residential property tax as a throwback to a socialist ideology warranting a rebuttal for its own sake. The most recent Forfás report “Shaping our Future” tentatively suggested that increases in the revenue yield from residential property tax should be examined. I have closely examined the contributions to that report and have found no famous socialist contributions among them. Presumably Forfás is alluding to the debate about the relationship between the tax base and income tax, a debate into which Fianna Fáil was prepared to enter while on the Government benches but not while in Opposition. The yield from capital and property taxation here has declined considerably in the past two decades and is one reason for our over-reliance on income tax and the PAYE sector.

My problem with the residential property tax is that it yields a meagre amount of money which is of no benefit in reducing taxation on income and neither does it raise money for required social changes or services. It cannot achieve those objectives and is cutting into the income of ordinary households in certain parts of Dublin. It has no potential for yielding any meaningful revenue. Neither has it succeeded in imposing a ceiling on house prices. In effect, it is an anti-Dublin tax.

The biggest problem occasioned by this residential property tax is the fear it instils in people. Since the former Minister for Finance, Deputy Bertie Ahern, reduced the threshold, which was revised by his Labour Party successor, Deputy Ruarí Quinn the Opposition parties have sought to instil fear about the tax in the minds of the electorate. Surprisingly, given their otherwise inept performance, they have succeeded, through duplicity, promoting ignorance about the tax, its limits and its various provisions such as marginal and child relief intended to mitigate its effects on certain households. They have succeeded in frightening people who do not and possibly never will have to pay the tax. As the Tories in Britain will confirm, fear is a very useful electoral weapon and can dissuade people from voting for certain people. It does little to create a sense of community or solidarity. It is divisive, negative and a poor reflection on any party that would adopt such a weapon.

By far the most positive outcome of this debate has been the attention it has drawn to service charges and the financing of local government generally. Will the Fianna Fáil Party, whose leader according to recent newspaper reports favours the allocation of increased powers to local councillors, indicate how his party proposes to increase those powers and how they will be financed? Does Fianna Fáil contend that the residential property tax is dissimilar from a form of rates? They should make themselves abundantly clear before this debate concludes.

Last evening Deputy Bertie Ahern alluded to Cabinet confidentiality and then proceeded to refer explicitly to Cabinet negotiations in the run-up to the 1994 budget in a manner which hid little from those present. This is the person who seeks to lead the country into a new century, yet seeks to bend constitutional privilege for political advantage. This tax was introduced as a tax on wealth but is beginning to develop into a tax that may affect people without any wealth. If it is to be dealt with, we should deal with it in conjunction with dealing with a tax which is even more unjust — service charges, which affect a huge number of people and which needs to be addressed much more urgently than does residential property tax.

Mr. Shatter

The debate on this issue, I suppose, is a caricature of Irish politics as practised for far too many years. I am sure members of Fianna Fáil and the Progressive Democrats take themselves very seriously on this issue. However, there are few people outside this House who take them seriously on it. The difficulty of being confined to Leinster House and the rarefied atmosphere we all breathe is that, on occasions, we lose touch with reality.

The electorate is not fooled, does not have a short memory and has not forgotten that, in the course of the existence of this tax, every single party represented here has been in Government at some stage. Of course, the distinction in the case of the Fianna Fáil Party — as other speakers have mentioned — is that they sought to extend it-to a much greater number of people and to far more modest houses that those to which it had applied at any one time prior to the 1994 budget. The approach taken by both opposing parties on this issue is simply a piece of hypocritical electioneering, the type of politics that makes people outside this House cynical of politics, politicians and all who inhabit this House.

The Progressive Democrats in Dublin have been distributing glossy leaflets requesting people to join their campaign against the residential property tax. I am sure many people have signed up but I am equally sure most people who did so remember that the Progressive Democrats were in Government with Fianna Fáil for two years and did absolutely nothing about that tax within that period.

I have always considered this a daft tax, not just because it is unfair to people who live in Dublin. Its unfairness has become more apparent in the last 18 months because of the dramatic increase in the value of houses, particularly in the city and county of Dublin. It has always been a daft tax because the cost of procuring its yield by way of administrative expenses just about matches the amount of revenue it yields. It is a tax that achieves nothing other than irritating people. In December, 1995, a person may not fall into the tax net but if, the following March or April, someone in that estate sells his house for, say, £20,000 or £30,000 more than anyone might have anticipated everyone in the estate will suddenly find themselves in the net. The reality in Dublin is that some fairly modest, semidetached houses fall into the net. The link between this tax and domestic water charges is hogwash, nonsense of the highest order. There are people paying residential property tax, and families who fall into that tax net this year, who pay and will continue to pay water charges. They are paying both taxes. As every party in this House knows, the hoary chestnut of dealing with the problems of financing local government in a manner acceptable to the majority of the electorate has been a difficulty to which no Government has been able to find a solution acceptable to the general electorate.

Since rates were abolished none of the parties in Government has come to terms with how to finance local government on an independent basis in a way that is accepted by the general population. Dealing with the issue of residential property tax should not await some miraculous solution to the problems of financing local authorities. The tax should be abolished. The Government is reviewing the effect of the tax, but we should not tinker with it. If many of those who unfairly find themselves in that tax net are taken out of it next year it is clear that the administrative cost of running the tax in 1997 would exceed any take on it. The State makes no money from it, it irritates people, it is unfair and anti-Dublin and should be abolished.

People should not be fooled by the rhetoric from Fianna Fáil and the Progressive Democrats on this issue because it is nothing but hypocrisy, cynical electioneering designed to create a general public amnesia of the record of both those parties in Government. The way those parties vote on this issue today does not deserve to be taken seriously. All we have seen is slick media campaigning in advance of the next election, bolstered by debate in this House, which will not fool the people.

Minister of State at the Department of Enterprise and Employment (Mr. Rabbitte)

There is something vaguely pathetic about the spectacle of the leader of the largest party in the House chasing the PD agenda in the same manner as he solicited the PD party throughout the summer. That he should select a subject that his own actions as Minister for Finance transformed into a contentious issue in politics for the first time highlights the uncertainty that besieges the Fianna Fáil Leader. I challenge any Member on either side of the House to produce evidence that the RPT was an issue of even the slightest concern before Deputy Bertie Ahern, as Minister for Finance, widened the scope in 1994 to double the number of householders liable to pay RPT. Not only was Fianna Fáil in office happy to implement RPT, but having been in Government for seven successive years Deputy Ahern was happy in 1994 to broaden this tax significantly. This Government undid the changes made by Deputy Ahern. Yet Deputy Ahern will have the public believe that this is a major issue in politics warranting a high profile campaign involving precious Private Members' time and a billboard campaign featuring, I am told, the indefatigable Deputy McCreevy and a dustbin. It is especially salutary to note that neither the Fianna Fáil campaign nor this motion contains any reference to water tax.

The public would be well advised to recall the last billboard campaign run by Fianna Fáil a decade ago, the most memorable of which was the infamous "Health Cuts Hurt The Sick, The Old And The Handicapped". Fianna Fáil ruthlessly exploited the sick, the old and the disabled for political advantage at that time. However, in office Fianna Fáil deepened the health cuts and the plight of the old, the sick and the handicapped went out the window until the then Taoiseach was reminded of them in a general election two years later in 1989.

This is a repetition of the cynical and opportunistic campaign of a decade ago by Fianna Fáil on health cuts, except that on this occasion there is no saving grace. Not even the robustly selfish Progressive Democrats when in Government gave a second thought to the abolition of RPT. Not even during the period when he ran the 1989-92 Government from exile did Deputy Michael McDowell as much as raise this issue in his Sunday Independent column, and there are not many issues about which one can say that.

More than half the yield from the present RPT comes from the 4,000 or so taxpayers whose houses are worth more than £175,000. Some, but not all, of these taxpayers are PAYE contributors who are therefore paying £1,000 per annum or more in addition to a marginal tax rate of 48 per cent. For a household whose aggregate income is £100,000 per annum and whose house is valued at £200,000 RPT is roughly £1,500 or 1.5 per cent of £100,000, just a little more than the 1.25 per cent health contribution payable on their gross income.

Altogether RPT currently affects about 23,000 households. Those whose aggregate household income exceeded £30,100 per annum in the 1995-96 tax year and whose houses were worth more than £101,000 last April where household incomes are more than £30,100 but less than £40,100, there is marginal relief; and there are also reliefs in respect of dependent children and people who are elderly, incapacitated or widowed. The result is that most of the estimated £13.5 million which will be raised through RPT in 1996 comes from people whose incomes are well in excess of £40,000 per annum, whose houses are worth substantially more than £125,000 and whose households do not comprise many of the people in our society who are at greatest risk of poverty, that is the young, the old, the ill or the disabled. It is interesting to note that if the house value threshold for RPT were raised to £125,000 the number of people paying this tax would be almost halved while the yield would only be reduced by about 10 per cent. Therefore it is clear that most of the tax is being paid by the wealthiest households.

It is beginning to look as if the Opposition parties want to revert to the era of auction politics irrespective of considerations of equity or economic growth. Even the highminded Progressive Democrats are prepared to drive Fianna Fáil down this road using, in the process, the Fianna Fáil Leader, Deputy Ahern, as a ventriloquist for Progressive Democrats policy. In fairness, this motion is probably the brainchild of the man the Progressive Democrats left behind, Deputy McCreevy, the Progressive Democrats cuckoo in the Fianna Fáil nest. Deputy McCreevy makes no bones about his advocacy of the cause of the wealthiest in society at the same time as he rails against what he calls "the poverty industry"— those who seek to champion those who have no fear of RPT bills because they have no jobs, or in many cases no hope or poorly paid jobs, poor living accommodation or rented accommodation.

Mr. E. Ryan

At least he has not deserted his ideology, as the Minister did.

Mr. Rabbitte

Deputy Ryan's intervention is interesting. The other billboard campaign by Fianna Fáil in the run-up to the next election apparently is the entirely laudatory amnesty for knives promoted by the angelic Deputy Ryan. Deputy Ryan is too nice to cause any threat to his party leader, but Deputy Bertie Ahern knows that in the event of his failing to get back into office on the next occasion, those knives — metaphorically speaking — will be passed along the Front Bench of Fianna Fáil.

Mr. E. Ryan

Is this the best the Minister can come up with? He should stop talking nonsense.

Mr. Rabbitte

It was the Deputy who intervened. He asked for it.

Mr. E. Ryan

Does the Minister remember the left wing days when he was full of the spirit of socialism?

Acting Chairman (Mr. T. Foxe)

An tAire Stáit, please, without interruption.

Mr. Rabbitte

I appeal for protection from Deputy Ryan. The prospect that he should attack me appals me.

Acting Chairman

The Minister should not beg Opposition comments.

Mr. E. Ryan

The longer he is in office the greater his arrogance.

Mr. Rabbitte

When the knives reach the Arianna Stassinopoulos of Connemara, Deputy Geoghegan-Quinn, she will not be reluctant to do what she has to do in terms of Deputy Ahern's position.

Mr. E. Ryan

Tomás Mac Giolla knows all about knives. The Minister gave him a few knives, and he is still pulling them out of his back.

Mr. Rabbitte

This is an opportunistic, cynical campaign by Fianna Fáil.

Mr. E. Ryan

When it comes to cynicism the Minister is a good man.

Mr. Rabbitte

When Fianna Fáil was in office it was very happy to implement residential property tax and the leader of Fianna Fáil was happy to double the number of householders liable to pay that tax.

Mr. O'Dea

Will the Government abolish it, yes or no?

Mr. Rabbitte

The position of my party is that we want tax and social welfare reforms that are co-ordinated to ensure adequate support for those on lowest incomes as well as improvements for people on middle incomes. Our position on residential property tax cannot be viewed in isolation from this general position.

Mr. M. McDowell

Back to the word processor.

Mr. Rabbitte

We want reforms which will improve the relative position of people on lower and middle incomes by giving greatest direct benefit to these groups and also by removing poverty and unemployment traps which impeded people's movement back into the labour force.

Mr. O'Dea

The Minister of State could have fooled us.

Mr. Rabbitte

These are my party's priorities in relation to tax and welfare reform and the criteria against which the details of our tax policies will be decided.

Mr. M. McDowell

The Politburo.

Mr. Rabbitte

This is why, for example, in relation to income tax I have gone on record as expressing a preference for increasing tax free allowances and widening the standard rate band rather than simply reducing tax rates. The latter gives greatest benefit to those who are already best off while increasing tax free allowances benefits for all taxpayers but especially the lower paid.

(Interruptions.)

Mr. Rabbitte

It is extremely disappointing that the Members opposite will not permit me to speak. I will have to reluctantly give way, Sir, if you are unable to maintain order. It is very revealing that they do not believe one word of what they are saying. The public outside should know that.

Mr. O'Dea

I wish to share my time with Deputies Tom Kitt and Michael McDowell.

Acting Chairman

Is that agreed? Agreed.

Mr. O'Dea

This is a serious debate and it is extremely regrettable that the Minister of State, Deputy Rabbitte, and the Minister of State, Deputy Avril Doyle, have not given us clear answers to the questions posed in the motion. Should the residential property tax, or the family home tax as I prefer to call it, be abolished and what are the Government's intentions in this regard? The Minister of State, Deputy Rabbitte, resorted to his usual tactic of vulgar abuse.

Mr. Rabbitte

It is not a charge that can be levelled against the Deputy.

Mr. O'Dea

While it was very amusing — I enjoyed it greatly — he resolutely refused to answer the questions posed in the motion. This demonstrates that the Government is in a state of confusion on the matter.

The Minister of State and Deputy Eamon Walsh who spoke before him were wrong to link the question of residential property tax or family home tax to that of service charges. As the Minister of State will be aware, the revenue raised from residential property tax is not used to fund local government. The funding of local government is a separate issue. What we are dealing with is the principle of a tax on the family home. It is wrong, iniquitous and inefficient.

Last night the Minister of State, Deputy Doyle, conceded that there were inequities.

Mr. Rabbitte

So do I.

Mr. O'Dea

I thank the Minister of State for that admission. As anybody who has read a basic textbook on taxation will be aware, the first chapter is always taken up with what are called the canons of taxation, the yardsticks against which a good taxation system should be measured. The first principle is that it should be equitable. Two Ministers of State have now admitted that residential property tax falls at the first hurdle, it is patently and blatantly inequitable. I am delighted that the Government has conceded on that point without promising or giving a commitment to abolish what it concedes is an inequitable tax on the family home.

Deputy Walsh said that residential property tax was a wealth tax. There are many assets such as cash deposits, heirlooms, antiques, paintings, large country estates and so on which constitute wealth, as I understand the term. Yet, one item, the family home, is singled out for the imposition of this tax. That is iniquitous.

Residential property tax is inefficient because the net revenue yield is £12 million. As the Minister of State well knows, if the time, energy and effort directed into collecting this tax was expended in the anti-evasion unit to obtain some payment from those who are not paying tax the State would be a net beneficiary.

Last week on television Deputy Jim Mitchell defended residential property tax on the basis that if we were to get rid of it we would be narrowing the tax base and increasing the burden on PAYE taxpayers. That is a patent nonsense. The yield is £12 million. I have heard Ministers for Finance announce in various budgets during the past 14 years that they were giving away hundreds of millions of pounds in tax reliefs, the net effect of which was a tax concession worth less than the price of a pint per week to the average family, yet we are now expected to believe that the foregoing of £12 million would virtually cripple the PAYE sector.

The Minister of State, Deputy Doyle, concentrated heavily on the fact that only 2 per cent or 20,000 taxpayers pay residential property tax but it impacts on people in another way. Let me explain what I mean. The crudity and absurdity of this tax was finally demonstrated to me last Monday night when I had a meeting with a group of residents from what is admittedly an affluent housing estate in Limerick city. They are paying every conceivable form of taxation. Those in the PAYE sector are paying income tax, PRSI, income levies, water tax and so on while those in business are paying corporation tax and all the other forms of taxation, including commercial rates on their business premises.

The question which exercised their minds and which they put to me was whether they would be subjected to residential property tax. Some months ago a house in the estate was sold for the sum of £96,000-£97,000. If another house in the estate is sold in the near future for a sum which exceeds the magic figure of £101,000 these people will suddenly be catapulted into a new taxation regime. If a sale takes place the circumstances of the people living in this estate will not change. Yet, if a price in excess of the magic figure is generated that single event will catapult them into a new taxation regime despite the fact that in a nearby estate where houses are £10,000 to £15,000 cheaper there are people, in terms of real wealth and income, who are infinitely better off. Some of the people living in the estate I am talking about have no mortgage while others own about 2.5 per cent or at most 5 per cent of their property because they have a 95 per cent mortgage. Is it fair, equitable and just that they will have to pay the same amount of tax? Nobody could seek to argue for a moment that it is.

The Government has concentrated on the changes it has made. One can raise the thresholds, increase marginal relief and provide exemptions for the handicapped, the sick and the elderly but the basic principle underlying this tax remains the same. People in similar financial circumstances will pay different amounts depending on where they live. This is not fair, equitable or just. The Minister of State, who is in business, knows how the people on whose behalf I am speaking feel. This is an iniquitous tax. It is built on a principle which is demonstrably false. Instead of increasing marginal relief, raising the income thresholds or providing for indexation, other than the CPI, the best thing to do is to consign this tax to the dustbin of history where it beongs.

Mr. T. Kitt

I thank my colleague, Deputy O'Dea, for sharing his time with me in this important debate. It is important that we get straight to the point. My colleague, Deputy McCreevy, is proposing that we should agree to abolish residential property tax given that it unfairly penalises those who reside within certain regions.

If we were to take seriously the contributions of Deputies to the debate both today and yesterday, we should simply abolish this tax because it seems that everybody is against it. It is time we had some degree of credibility in the debate. Even the infamous Minister of State, Deputy Rabbitte, who has a knack when under pressure of using the old adage that attack is the best form of defence, did not face up to the real question but instead attacked some of my colleagues without addressing the issue of residential property tax.

It is important to outline the history of the tax. It was first introduced by a Fine Gael-Labour Coalition Government in 1983. As a former Taoiseach, Dr. Garret FitzGerald, stated in his autobiography:

The income related property tax was an idea of mine which I had worked on during 1982 with my daughter-in-law, Eithne. Naturally enough when I put this to Dick Spring during our post election discussions, he was happy to accept my proposals.

I am happy to put that quote on the record of the House although I am sure some of my colleagues have already done so.

We must be fair to the Fianna Fáil Party. My party leader, Deputy Ahern, was criticised by many Deputies today, particularly those of the Labour Party. They have some neck to make such criticisms because in 1994, the Government of which my party leader, Deputy Ahern, was a Minister, decided to adjust the valuation and income thresholds. If those Deputies had bothered to check with their party leader and those who were in Government at the time they would know that this was a Labour Party agenda. It is unfortunate, however, that rather than accept that fact they decided to use an old political trick and go on the attack.

I realise Cabinet confidentiality must be respected in this House but Fianna Fáil was attacked in the past for being unable to compromise with other parties in power. We are told Fianna Fáil is a stubborn party but the truth is that the Labour Party got its own way in regard to this issue. If the Labour Party Deputies are listening I hope they will accept that fact and not attempt to twist the facts of history.

This is a cruel, anti-family and anti-Dublin tax. If Deputies were honest with themselves they would follow Deputy McCreevy, the other Fianna Fáil Members and the Progressive Democrats Members through the lobbies today to vote for this motion. It was obvious from her contribution that Deputy Frances Fitzgerald is tortured by this debate and will find it difficult to walk in the opposite direction to our party when the vote is called shortly.

This debate is connected to the whole debate on local authority service charges. Many Members of this House have been members of local authorities and we are very much aware of the need for proper local authority financing. Our party spokesman, Deputy Dempsey, offered to co-operate with the Government on this issue but, unfortunately, it decided not to accept that genuine offer. A White Paper on local government reform, promised by the Minister for the Environment, has been binned until after the next general election.

Governments are elected to govern and to make difficult as well as easy decisions. We have heard much good news recently and the Exchequer returns indicate that a great deal of money is available for a tax giveaway in the next budget; that has been well signalled. Many favourable announcements have also been made about transfers from Europe, but it is clear that this Government has decided that if any problem or difficulty arises, they will simply kick it out of the way.

When the Minister for Social Welfare, Deputy De Rossa, got his way on the issue of the disconnection of householders who had not paid their water charges, on which there was a great deal of fudging, I said that the issue of local authority service charges would not be dealt with until the next Government comes to power. I hope Fianna Fáil will be involved in such a Government because I know it has the ability, as it has shown in the past, to face up to such difficult issues.

Local government is entitled to a proper system of local finance and with the opportunities that now exist to lower the level of taxation for PAYE workers in particular, such a system could be provided. It is quite evident, however, that this Government does not have the guts to do that.

We have heard some fine speeches here today, particularly from the Minister of State, Deputy Rabbitte, who spoke about the need for tax and welfare reforms and then sat down. I have heard that before and it is an insult to this House that the Minister of State would come in here and make various accusations about Fianna Fáil. He is entitled, and indeed has a duty, to put forward concrete proposals during Private Members' time. When he first came into this House, the Minister of State made various outlandish allegations and statements but on this issue he stated that this tax was anti-Dublin, anti-urban and anti-family. Fianna Fáil Members agree with him but we would like to see some consistency with regard to his views on this subject.

I will make some further brief comments, because I want to share my time with Deputy McDowell who supports Fianna Fáil on this matter, on the reasons this tax should be abolished. The tax discriminates against urban homes, mainly in Dublin, where values are higher; we have seen that in recent times. Nearly 80 per cent of the tax is paid in the Dublin area. Children's income is included in the assessment and children may have to leave the parental home; that is the reason I say the tax is anti-family. There is no ceiling on RPT. Taxes are unproductive when they are on property. The tax reduces jobs in the building sector because people will not invest in home improvements and move upwards in the market. The tax is anti-family because it is related to both home incomes, in other words, a type of poll tax, and to house values, a property tax. Many rural householders with lower value homes but higher home incomes will avoid the tax. This tax divides rural and urban Ireland and in that way it is a most contentious tax.

There has been a great deal of hypocrisy in the debate. All the parties in Government, particularly the Labour Party, attacked Fianna Fáil for what it did in the past. They need to be reminded, however, that they introduced this tax in 1983. Fianna Fáil made adjustments to it in Government but that was done out of a sense of compromise with the Labour Party in Government. Now that we are in Opposition and free of the shackles of a Coalition Government, we are not only entitled but duty bound to produce our own policies. Our policy on this particular tax is that it should be abolished. I call on Deputies who feel strongly about this issue to act according to their statements and vote in favour of the Fianna Fáil motion.

Mr. M. McDowell

It is interesting that a few days ago was the last occasion taxpayers will ever pay residential property tax because, one way or another, either this Government will remove it in the next budget or it will be removed by the electorate before the next payment date is due. It is the end of this tax and I welcome that fact but I also reject completely the suggestion by the Minister of State, Deputy Rabbitte, that the opposition to this tax is being cynically exploited for political purposes. This tax is unfair and every Government Deputy who has spoken in the debate thus far has admitted it is unfair, but they believe the public had no voice until recently and nobody was willing to bring it to a head until recently.

People living in areas where this tax particularly bears down on ordinary families will no longer tolerate it. Deputy Broughan was on radio with me last night and announced to my astonishment that the Labour Party was in favour of repealing this tax. If it is in favour of repealing it, who is holding out to keep it? Is it the Minister of State, Deputy Rabbitte, who in the last few minutes said he believes it is unfair, or is it the Minister for Social Welfare, Deputy De Rossa? Who is holding us to ransom to keep this tax in place?

The question that really arises at this stage is not whether this is the last occasion on which the tax will be paid, but whether the reason it is going is that those ideologues who justified it year in year out in the past, who made a virtue of it, who said that it was the comfortable people in this country who were squealing, are now afraid of judgment on the issue and are running like scalded cats because they know they cannot justify this tax any more.

People can get up in a heap about the fairness or unfairness of this tax. At least one Member of Government rank in this House has managed to evade the tax because her house was occupied by James Joyce at one stage in the past. Are we not all famous men and women in our own ways? If it is possible for one Member of the House to do it, could we not all throw open our houses to the public now and then, simply based on our own fame and, thereby, walk away from the tax?

There are other manifest injustices in the tax. For example, a High Court or Supreme Court judge might be earning at full power up to the age of 72 and be liable for RPT at 1.5 per cent a year on a house worth £300,000. If, on reaching the age of 65, he or she takes the simple expedient of transferring the home into their spouse's name on the presumption that the spouse has no income of their own, they avoid taxation liability completely. This can be achieved by simply signing the house for a number of years into the spouse's name. That is not figurative, it is a real possibility. It applies to businessmen and to many people who, if there were equity in this tax, would be liable for it. By juggling pieces on a board, they can walk away from the tax.

I published a leaflet on residential property tax which showed that a couple who owned a house worth £180,000 and who were lucky enough to also own a holiday home worth £80,000 would, on one scheme of ownership, owe the State £2,490 in tax, but by shifting the properties between them to minimise their tax exposure they would end up paying nothing. What is fair about a tax like that where one couple can end up paying nothing because they have had good advice and have shifted their houses around between them and another couple living in an identical house and with the same income have to earn £5,000 gross to pay £2,490 net to the Exchequer on foot of this tax?

Another point we must bear in mind is the rise in house prices. How can people on fixed incomes plan their affairs if they may become liable this year or next year to pay an extra £1,200 in RPT because of a surge in house prices? Last night the host of the radio programme on which I appeared said this was a tax for rich people. However, two primary teachers, both working and living together in a modest terraced house in my constituency, not even a semi-detached house, could be well into this tax band. They are ordinary people working hard to try to improve their situation. They are trying to establish a family. Both have to work outside the home and frequently have to pay someone to look after the children at home. These are modest people. They are not the wealthy, the plutocrats in our society. They get clobbered by this tax for living in a particular part of the city. It is an inequitable mean-minded illogical tax. The former Taoiseach, Dr. Garret FitzGerald, for whom I have an immense personal fondness but with whom I am not on the same political wavelength described the genesis of this taxation in great detail in his autobiography — we have heard about it on a number of occasions in this House. The mind boggles as to what other schemes were on the table when the pair produced this as the most workable of the proposals they had for introducing social justice in our society. The mind boggles as to what was discarded as unworkable, unpopular or unfair if this was considered fair.

Mr. Taylor

You were quite a colleague of his at the time.

Mr. M. McDowell

The Minister will be glad to hear that I was present at a meeting when a very senior member of that party, whom we may have mentioned in the past few minutes, was urged to index tax bands and allowances. I will not say whence the words came, but they resonate in my ears to this day —"indexation of tax bands and allowances would be end of all social justice". These are the people who wrote articles later saying that the tax system is unduly onerous on those at the bottom of the system.

When they were given the opportunity to index it and to keep it fair, they turned it down. Without being personal or vindictive, this is the last year in which Irish people will pay residential property tax. The reason this is so, the reason Labour Party Deputies are running away from the issue and discovering its unfair qualities for the first time, the reason Democratic Left suddenly realised this is an insupportable tax is that the Government parties fear they will be hammered in Dublin at the next election if they do not give up on this tax in the next budget.

The reason Government parties will not accept this motion today and table an amendment to the effect that RPT will be abolished in the next budget is that they want to increase the sense of pleasant surprise in the next budget and to increase the size of the bag of goodies so that everybody will be seen to have delivered to his or her constituency the next time round. Instead of being man or woman enough to come into the House and say it will be abolished, this ridiculous game of mental striptease is being played; it may or may not go or it might or might not be modified. I say it will go because if it does not the government that does not make it go will itself go and in short order. This is, therefore, a moment of considerable pleasure to me. Those of us who have opposed this tax, who asked ordinary people to subscribe to leaflets — Deputies Rabbitte and Shatter were somewhat disparaging about this — to write to Government Deputies and make their views clear, have brought about a situation in which this unfair tax will now go, and no one will lament its passing.

There are a couple of Deputies in this House who will not even put their heads above the parapet. They have been vociferous defenders of this tax in the past, but none of them has contributed to this debate to say that it is fair tax or that they would go up on the cross, so to speak, to defend it or to keep it there. It is suddenly not a matter of principle any more, quite the reverse; it is a matter of shame, a matter that nobody wants to be associated with. Those of us who brought this issue before the electorate and told them that if it was not abolished in 1996 it would be abolished in 1997 can claim the credit for this implosion on the part of the supporters of residential property tax.

It is being suggested that the Govenment wants to involve the Opposition in an all-party process to examine the issue of local government finances. In 1993 during the budget debate in this House I suggested that this be approached on an all-party basis.

In 1994 and 1995 I made the same offer. In 1996, the matter was discussed at the Select Committee on Finance and General Affairs. Now, coming into 1997, the notion of an all-party committee is suddenly attractive to the Government as a vehicle for avoiding responsibility on this issue. It is too late for that; let the Government govern and the people decide. One cannot wait until the 11th hour and 59th minute for an all-party process when the best process is through the ballot box. If local government finances are to be decided by an incoming Government, it is up to the parties to secure a mandate one way or another on the issue, and do what must be done about local government, which has nothing to do with residential property tax.

Minister for Equality and Law Reform (Mr. Taylor)

I welcome the opportunity to give the Government's reply to the Fianna Fáil motion and to further commend to the House the Government's amendment to the motion.

Last night, Deputy Bertie Ahern accused the Government of "suppressing hundreds of millions" in tax revenue when preparing this year's budget. There is no foundation for this suggestion which I was surprised to hear from a former Minister for Finance. The Department's tax forecasts for this year were prepared in the usual way taking a prudent but certainly not pessimistic view of economic prospects and with the technical assistance of the Revenue Commissioners. Much of the extra buoyancy in tax receipts is attributable to stronger economic growth generally and in particular to stonger employment growth and higher consumer spending than was foreseen either by the Department or almost any other economic analyst at the beginning of this year.

The budget was based on GNP growth of 5 per cent. At that time, the Central Bank was forecasting 4.8 per cent; the ESRI, 5 per cent and Davy Stockbrokers, 5 per cent also. The Department of Finance's budget day forecast of an increase in employment of 31,000 — 2.5 per cent — was in line with that of the ESRI and most other independent forecasters at the time.

The Department's forecast of growth in consumer spending of 4.5 per cent was one of the most optimistic at the time. It compares with forecasts of 3.25 per cent by the Central Bank, 4.25 per cent by the ESRI and 3.5 per cent and 4.1 per cent by the EU Commission and the OECD respectively.

It is also interesting to look back on what some of the market analysts said just after the budget was published. For example, Davy Stockbrokers said on 23 January:

We don't quibble much with the Department's tax projections... Overall the EBR target looks achieveable but an undershoot is not the highly probable outcome that was obvious on other Budget nights in recent years... We are at one with the Department of Finance in forecasting a deceleration in the pace of growth this year and a 5 per cent rise in real GNP.

NCB Stockbrokers said:

In our view the Budgetary targets should be robust. If anything the official tax revenue forecasts err a little on the conservative side.

The real facts about residential property tax should not be concealed. The tax has been in existence since 1983. The first major change in RPT was introduced in 1994, when the value and income thresholds were reduced to £75,000 and £25,000 respectively, thereby widening the number of households affected by the tax. This Government's Programme of Renewal gave a specific commitment to reverse the changes introduced in the 1994 Budget. This commitment was met at the earliest possible date in the 1995 Budget and subsequent Finance Act.

I hope that we have finally put to rest the myth that those paying RPT are paying huge amounts. The figures produced by the Revenue Commissioners on RPT show that 30 per cent paid less than £100 and 71 per cent paid less than £500 last year. Of course, a person exceeding the income exclusion threshold and living in a substantial urban property may be faced with higher RPT liabilities but, even then, he or she will be eligible to avail of the reliefs to reduce his or her actual liability, for example, by 10 per cent for each dependent child. The statistics from Revenue also prove that the incidence of RPT is quite small affecting some 2 per cent of income tax payers. I quote those figures not to trivialise the debate or the tax but to ensure that a proper sense of perspective is maintained.

I hope that the Minister of State's speech last night knocked on the head the myth that RPT is a Dublin tax. Statistics show that three-quarters of RPT is paid by persons in Dublin city and county but the reasons for this are equally relevant to any capital city in the world — most of a country's valuable residential properties are found in capital cities and income in capital cities tends to be higher. This means that in any national tax based on market values it is inevitable that persons in high value areas will pay a disproportionately higher proportion of the overall tax. It is disingenuous to suggest that this means that the tax is unfair or biased when it must be accepted that the market values are the most equitable for assessment.

My colleague, the Minister of State, Deputy Doyle, rightly took the time last night to highlight the many other improvements in personal and business taxation brought forward by this Government. All of those measures are in direct contradiction to the charges made by the Opposition speakers and I again place on record the Government's commitment to continue to develop a climate for enterprise, investment and individual reward.

I commend the amendment to the House.

Mr. M. Ahern

It is quite clear from statements made in this House by members of all political parties — not only this afternoon and last evening but over the last number of years — that a vast number of them are against the residential property tax. I know I will bore the House by repeating some of those comments but it is worthwhile doing so.

On 23 March 1994, Deputy Rabbitte, who is now a Minister of State, made a statement in the House with regard to the changes in the residential property tax. He confirmed today that he still holds the view that the tax was anti-Dublin, anti-urban and anti-family.

The Minister for Agriculture, Food and Forestry, Deputy Yates, who was the Fine Gael spokesperson on finance in 1994, was very critical of the tax. He gave a good example of the effect of the tax in 1994 when he said that a person who might have come to work in Dublin years ago and bought a modest house would find himself paying £850 in residential property tax. That was over two years ago so one could increase that amount substantially due to the increase in house values since. To illustrate that the rates are biased, Deputy Yates compared a house in Dublin to one in Letterkenny, County Donegal, where a resident would have paid £240.

On 24 September 1996, eight members of the Labour Party signed a statement in Dublin stating that the residential property tax should be abolished. They have seen the errors of their ways and I am sure they are pushing within the Labour Party to have the tax abolished in the forthcoming budget. They know it was never envisaged that ordinary people, who are being hit now by the tax, would come into the tax net. They see the effect the tax will have at the next election and they are looking for its abolition. No doubt the Minister for Finance will give them a good ear.

The Minister who introduced the tax in the 1983 budget was Deputy Dukes and he made the following statement in The Sunday Business Post of 25 August 1996:

It was a bad tax. I say that as the minister who brought it in. Labour wanted some other element of capital taxation so that they could say to their perceived group of voters, who wouldn't be paying it, that there was a way which better off people would contribute.

It produced a lame duck, a difficult to manage system that was arbitrary and led to more aggravation than revenue. It was always going to produce anomalous situations. I'd prefer to see it gone, quite frankly. The taxation system should not be something that determines how people go about choosing the kind of house they are going to live in. It was a badly designed tax which was brought in for a reason which had nothing to do with the taxation of residential property.

I am sure he has not changed his mind even though he has not come into the House today. When Deputy Dukes makes a statement he stands by it.

Democratic Left is made up of two elements: the provisional Democratic Left of two Members, Deputies Lynch and Byrne and the official Democratic Left in the Cabinet. The provisionals make skirmishes and let the people know the real policies of Democratic Left and that bartering goes on within the Cabinet. In yesterday's edition of The Examiner Deputy Lynch stated that the residential property tax would go for the simple reason that the service charges have to be abolished as well. One will be bartered against the other. The reason is it also suits the Labour Party — that Mr. Joe Higgins, who has been campaigning against water and service charges made a big impact in the last by-election in Dublin. If both wings of Democratic Left and The Labour Party can agree with Fine Gael, who want to get rid of the tax, it can be used as a bartering tool. As Deputy McDowell said there are vested interests on all sides. There is nothing surer that residential property tax will be abolished in the next budget.

It is tautology at this stage to continue to say it is arbitrary, inequitable, unfair and strikes at the heart of the family. It is striking at the heart of more and more families throughout the country than was ever intended as the value of houses has escalated enormously during the past year or so. It is a wealth tax which was insisted on by the Labour Party to get funding from the wealthy but it is now hitting people who could not in any manner or form be declared as wealthy. The Labour Party pushed for changes in the rates and limits in 1994. It was the baby of some of the militant plinth-loving camera-hugging left-wing members of the Labour Party who insisted there would be changes in 1994. For Members to come in and blame Deputy Ahern for carrying out those changes is a bit rich. We are all aware that in a coalition Government there must be compromise. When parties threaten at every hands-turn to pull out of Government unless they get exactly what they want and when sectors of a party threaten their leadership they will pull the plug unless something radical is done the result is that the tail is wagging the dog. That happened in 1994.

I ask the Minister to listen to the ordinary people who are asking that this tax be changed and to Members from every political party and announce he will remove it. We all know he will do it. Members from all sides have requested it to be changed and have pointed out the reasons for change. There will be no political advantage if he announces it on budget day. Every party, including the Labour Party, has said it because it knows what will happen. The Fine Gael Party surprised me because it has kept quiet about it even though I am aware that behind the scenes it is saying it must be done because its supporters are those most affected. I ask the Minister to come clean, announce it and get it over and done with.

Mr. McCreevy

In the few minutes remaining I would like to quote a fairly good synopsis of why we should abolish residential property tax. Deputy Michael Ahern has made some apt quotations from Deputy Alan Dukes in a recent interview where he spelt out the reasoning, the background and the political goings-on prior to its introduction in 1983. He, as the Minister for Finance who introduced it, gave the reasons it should be abolished. I quote from another person some comments on the reason it should be abolished. He said:

We are happy to support the campaign of the Home Owners Rights Association and put pressure on the Minister for Finance to abolish the tax...

In this context Fine Gael is happy to support the petition and to endorse it with our individual signatures. We sincerely hope that the Government will reconsider their position in this matter and realise that, in effect, the RPT is a surtax on incomes as family homes provide no liquidity or income.

That is from a letter written by Deputy Yates, the then Fine Gael spokesperson on Finance in April 1994. Deputy Yates and other Fine Gael Deputies signed a petition which called on the Government to abolish residential property tax. Of all the people who contributed, the Minister of State, Deputy Doyle, appeared to be the only person who spoke in favour of retaining the residential property tax. All the others referred to the inequities and the anomalies. Deputy Frances Fitzgerald went very far down the road and said she would abolish it. Deputy McDowell was able to inform the House that the new political guru of the Labour Party, Deputy Broughan, announced on a radio programme last night, on behalf of the Government, that it would be abolished. I am sure this was news to the Minister, Deputy Taylor. While I respect Deputy Broughan I did not think Deputy Spring had given him a licence to announce Government policy on the radio.

Mr. Taylor

The Deputy is giving us all the quotes except those of the Fianna Fáil-Progressive Democrats Government. Where are those quotes?

Mr. McCreevy

Deputy Michael Ahern described Democratic Left adequately as saying that the provisional wing of Democratic Left in the persons of either Deputies Eric Byrne or Kathleen Lynch announce policy decisions on behalf of Democratic Left. In yesterday's edition of The Examiner Deputy Kathleen Lynch announced it would abolish them.

Mr. Taylor

What about the Fianna Fáil-Progressive Democrats government?

Mr. McCreevy

This is a commentary on the run-up to the next general election. Apart from the Minister of State, Deputy Doyle, I cannot find anybody in the House who is in favour of this tax. In his contribution Deputy Taylor, Minister for Equality and Law Reform, did not defend the tax so I presume he is in favour of abolishing it. He said it was unfair.

Mr. Taylor

Equality equity.

Mr. McCreevy

Is there anybody left in the House to vote against this motion? If logic has any meaning we should all troop through the lobbies and vote Tá.

Maybe the Minister of State, Deputy Doyle, will be left on her own because her speech was the only one that gave any credence to it. An interesting point from her speech — it is a gem and should be pinned up in all Government Departments as to how to write the obvious — reads:

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.

I do not know whether people go on courses to write such material but would they please go on a new course because this is blindingly obvious even to Members of Democratic Left and the Labour Party.

This whole debate and the run-down to the abolition of the residential property tax is perhaps a commentary on the political system and the way it has changed in the past number of years. Speakers in the House have reminded us that Democratic Left and the Labour Party are after the votes of the middle ground rather than the extremes and are competing with one another to abolish this tax.

For the past 30 years or longer they have made numerous speeches on taxation of the rich. Maybe it is good that the type of nonsense we had to endure during that period is coming to a head.

Mr. Taylor

There has been no reference to the Progressive DemocratsFianna Fáil Government.

Mr. McCreevy

I hope this is the last occasion on which we will have to listen to that nonsense. I exclude Deputies Eric Byrne and Kathleen Lynch from that remark.

Mr. Taylor

There has been no reference to the Deputy's former colleagues in Government.

(Interruptions.)

Mr. McCreevy

I look forward to the abolition of the residential property tax by the Minister for Finance. Given the number of Deputies who spoke against RPT, I assume the motion will be carried.

Amendment put.

The Dáil divided: Tá, 67; Níl, 54.

Tá

• Ahearn, Theresa.
• Allen, Bernard.
• Barry, Peter.
• Bell, Michael.
• Bhamjee, Moosajee.
• Boylan, Andrew.
• Bradford, Paul.
• Bhreathnach, Niamh.
• Broughan, Tommy.
• Browne, John (Carlow-Kilkenny).
• Bruton, John.
• Bruton, Richard.
• Burke, Liam.
• Byrne, Eric.
• Carey, Donal.
• Connaughton, Paul.
• Costello, Joe.
• Coveney, Hugh.
• Crawford, Seymour.
• Creed, Michael.
• Crowley, Frank.
• Currie, Austin.
• Deasy, Austin.
• De Rossa, Proinsias.
• Doyle, Avril.
• Durkan, Bernard J.
• Finucane, Michael.
• Fitzgerald, Brian.
• Fitzgerald, Frances.
• Flaherty, Mary.
• Flanagan, Charles.
• Gallagher, Pat (Laoighis-Offaly).
• Harte, Paddy.
• Higgins, Jim.
• Higgins, Michael D.
• Hogan, Philip.
• Kavanagh, Liam.
• Kemmy, Jim.
• Kenny, Enda.
• Kenny, Seán.
• Lynch, Kathleen.
• McCormack, Pádraic.
• McDowell, Derek.
• McGahon, Brendan.
• McGinley, Dinny.
• McGrath, Paul.
• McManus, Liz.
• Mitchell, Gay.
• Mitchell, Jim.
• Moynihan-Cronin, Breeda.
• Mulvihill, John.
• Nealon, Ted.
• O'Keeffe, Jim.
• O'Shea, Brian.
• O'Sullivan, Toddy.
• Owen, Nora.
• Pattison, Séamus.
• Rabbitte, Pat.
• Ring, Michael.
• Ryan, John.
• Ryan, Seán.
• Shatter, Alan.
• Sheehan, P.J.
• Shortall, Róisín.
• Upton, Pat.
• Walsh, Eamon.
• Yates, Ivan.

Níl

• Ahern, Dermot.
• Ahern, Michael.
• Ahern, Noel.
• Brennan, Matt.
• Brennan, Séamus.
• Briscoe, Ben.
• Burke, Raphael P.
• Callely, Ivor.
• Coughlan, Mary.
• Davern, Noel.
• Doherty, Seán.
• Ellis, John.
• Fitzgerald, Liam.
• Flood, Chris.
• Foley, Denis.
• Foxe, Tom.
• Geoghegan-Quinn, Máire.
• Gregory, Tony.
• Harney, Mary.
• Haughey, Seán.
• Hilliard, Colm M.
• O'Keeffe, Ned.
• O'Malley, Desmond J.
• O'Rourke, Mary.
• Power, Seán.
• Quill, Máirín.
• Ryan, Eoin.
• Hughes, Séamus.
• Jacob, Joe.
• Keaveney, Cecilia.
• Kenneally, Brendan.
• Keogh, Helen.
• Killeen, Tony.
• Kirk, Séamus.
• Kitt, Michael P.
• Kitt, Tom.
• Lawlor, Liam.
• Leonard, Jimmy.
• McCreevy, Charlie.
• McDaid, James.
• McDowell, Michael.
• Moffatt, Tom.
• Molloy, Robert.
• Moynihan, Donal.
• Ó Cuív, Éamon.
• O'Dea, Willie.
• O'Donnell, Liz.
• O'Hanlon, Rory.
• Smith, Brendan.
• Smith, Michael.
• Treacy, Noel.
• Wallace, Dan.
• Wallace, Mary.
• Woods, Michael.

Tellers: Tá, Deputies J. Higgins and B. Fitzgerald; Níl, Deputies D. Ahern and Callely.

Amendment declared carried.

Motion, as amended, put and declared carried.