Finance (Local Property Tax) Bill 2012: Second Stage

Minister for Finance (Deputy Michael Noonan)

I move: "That the Bill be now read a Second Time."

The introduction of the local property tax will deliver significant economic and fiscal reform through broadening the revenue base to pay for vital public services in a manner that does not directly impact on employment. It will be fair and progressive, with the owners of the most valuable properties paying the most property tax.

The Government also sees the necessary introduction of this tax as an opportunity for very real political reform at local government level. The local property tax will provide a stable funding base for the local authority sector, incorporating appropriate elements of local authority responsibility. This will strongly reinforce local democratic decision-making and encourage greater efficiency by local authorities on behalf of their electorates.

A notable feature of Irish taxation in recent decades has been the almost complete absence of an annual or recurring tax on residential property. Rates on domestic properties were abolished in 1978 and the funding shortfall was met by direct Exchequer transfers to local authorities and other means of funding, primarily through the use of fees and charges for local authority services. Domestic rates were partially replaced by the introduction of a residential property tax in 1983. However, residential property tax proved ineffective because of its narrow base, the perceptions of unfairness, complicated administration and low yields. It was effectively abolished in 1996.

All of the available evidence suggests that the taxation of property through a recurring annual tax is economically less distortionary than the imposition of tax on income or capital. This is supported by economic literature and recent OECD analysis. The OECD has highlighted that annual taxes on land and buildings have a relatively small adverse impact on economic performance. A policy note prepared by the OECD economics department in 2012, What are the Best Policy Instruments for Fiscal Consolidation?, argued that "less distortive and corrective taxes should be given priority". The paper concluded that increasing taxation on property is less harmful to growth than increasing the burden on more elastic tax bases such as labour.

Apart from the absence of a property tax, the OECD has reported that Ireland "has some of the most generous tax provisions for owner-occupied housing". Ireland is the only country to allow tax relief on rent, on mortgage interest payments, on capital gains through the principal private residence relief and on capital acquisitions by means of the dwelling house relief. In that context, it should be noted that we had relatively high rates - up to 9% - of stamp duty on property transactions. The over-reliance on revenue from transaction-based taxes - stamp duty and, to a lesser extent, capital gains tax and capital acquisitions tax - led to a significant fall in tax revenue when the number and value of transactions decreased sharply from 2007 onwards. That created sizeable problems for Ireland's fiscal policy. The local property tax is being introduced against this background. The aim is to provide an alternative to transaction-based taxes. International experience has shown that an annual recurring property tax can be a stable source of funding, particularly for local government.

The overall budgetary position is another part of the context for the introduction of the local property tax. Moving towards a balanced budget is a necessary precondition for restoring the economy to sustainable growth and job creation and securing our objective of re-entering the international bond markets. We are moving in the right direction in that regard. It is clear that the deficit remains very high, which means that a challenging road lies ahead. Ireland's deficit, which is estimated to be 8.2% of GDP this year, or just under €13.5 billion, will be one of, if not the highest, in the EU. We cannot continue to run such deficits into the future. It is important that the gap between our revenue and expenditure is closed further in the coming years. This will require the implementation of further budgetary consolidation measures. Budget 2013 marks the latest step on our road to renewed public finance sustainability. For 2013, a general Government deficit limit of 7.5% of GDP applies under the EU-IMF programme. Budget 2013 outlined the revenue-raising measures consistent with the €3.5 billion consolidation package which will assist the State in achieving its fiscal targets. The local property tax is one such revenue-raising measure. As I have indicated, it is a tax on assets, not employment, and therefore will not adversely affect job creation.

The introduction of a value-based property tax is part of our obligation under the EU-IMF programme. In the latest memorandum of understanding between the Government and the troika, a commitment was given to introduce the tax in budget 2013. The introduction of a property tax has been a condition of the programme since it was first negotiated in November 2010, under the previous Fianna Fáil Government. It has remained a condition of the programme following subsequent reviews which are agreed by all programme partners. These measures are deemed necessary to reduce further the deficit in the public finances and ensure continued adherence to fiscal targets set as part of the EU-IMF programme. It is true that the Government has some scope within the programme to use alternative methods to achieve programme targets. However, the yield anticipated from the local property tax could not otherwise have been achieved without significantly reducing overall expenditure on vital public services or increasing taxation on incomes and spending. The Government did not want to add to the already necessary cuts in public expenditure or place additional costs on job creation. In light of the complex issues involved in a full property tax, the Government decided to introduce the household charge in 2012 as an interim measure. I thank the Minister for the Environment, Community and Local Government and the officials in that Department and the Local Government Management Agency for their work on the household charge and their assistance with the design of the local property tax.

The Minister, Deputy Hogan, established an interdepartmental group in February 2012 under the chairmanship of Dr. Don Thornhill to consider the structures and modalities for a full property tax. The Thornhill group's terms of reference were to consider the design of a property tax to replace the household charge and to ensure such a tax is equitable and informed by previous work and international experience. I thank the group for its work. I also thank the bodies and individuals who made submissions for the group's consideration. The group's report has been published by the Minister for the Environment, Community and Local Government. I am pleased to say the Government has accepted most of the 18 core recommendations made by the group that deal with policy and the administration of the tax, albeit with some exceptions and variations. Residential properties owned by local authorities are exempt from the household charge. The Thornhill group recommended a similar exemption for local authorities from the local property tax, but the Government has concluded that there could be issues of proportionality in the differing treatment of owners and local authority tenants. The Government therefore did not accept the recommendation. Local authorities will therefore be liable for the local property tax as owners of residential properties.

The Thornhill group proposed that a local decision factor be applied to enable local authorities to vary the central rate by between 5% and 15% above the national rate. This provision is referred to as the "local adjustment factor" in the Bill before the House. Like the Thornhill group, I consider that the exercise of local discretion in setting the tax rate in a local authority area is essential to the credibility of the tax. If we give local authorities significant responsibility for raising local revenue, it will increase the level of oversight of local authority operations by the electors and thereby strengthen democracy at local level. It will also facilitate a level of local decision-making that can be used to address urban-rural variations in value. Therefore, the Government considers that a wider range - up to 15% above or below the central rate - would more closely match the expenditure needs and commitments in the local authority area in which the tax is collected. The Thornhill group proposed that a substantially greater part - in the order of 65% - of the revenues arising from the taxation of properties should be assigned to the local authority in which the taxable properties are situated. The allocation and redistribution of revenues will be considered and determined by my colleagues, the Ministers for the Environment, Community and Local Government and Public Expenditure and Reform. The possibility of giving local authorities wider scope to vary from the central local property tax rate than that envisaged in the Thornhill report will be a factor in their consideration. The Thornhill group recommended that the non-principal private residence charge should be absorbed into the local property tax as a separate supplemental tax in addition to the local property tax at the existing level applying to non-principal private residences. However, the Government has decided that while the non-principal private residence charge will be collected in 2013, when a half-year local property tax will apply, it should be discontinued thereafter.

I wish to summarise the key elements of the local property tax. Owners of residential properties will be liable for payment of the tax. The market value of relevant properties, as assessed by the owner, will be the basis of the level of tax to be paid. Valuation guidance will be provided by the Revenue Commissioners. The rate of the tax will be 0.18% of market value up to €1 million, with properties worth over €1 million being taxed at 0.18% of the first €1 million and at 0.25% of the balance. A property owner, on a self-assessment basis, will declare that his or her property is in a particular valuation band. Where the property is valued below €1 million, the charge that is applicable to that band will be applied to the property. Properties valued over €1 million will be assessed at their actual value, with no banding applied. Certainty will be provided for property owners. The initial valuation will be valid for three years, up to and including 2016. The central national rate will not vary for the lifetime of this Government. The tax will be collected by the Revenue Commissioners.

Liable persons can choose from a variety of payment arrangements, including paying the tax directly or having it deducted at source from salary or State payments. Deduction at source will be the default method of payment if another method is not chosen. Owner-occupiers with incomes below specified limits will be able to defer payment of the tax. Amounts deferred under these provisions will, however, remain a charge on the property.

Before going through the main elements of the Bill, I will discuss briefly why the market value of properties was chosen as the basis of assessment. The Thornhill group did consider other possibilities, such as site or land value, floor area, and a combination or matrix of other possibilities. These other options were rejected on the basis that market value was the most easily understood and ascertainable concept, and one which best reflected the rationale for the tax. The site value option can lead to serious inequalities with the same rate being applied to two very different properties on similar sites. Also, its international use is very low due to the high level of litigation associated with its usage. The market value of a property will reflect its proximity to services and amenities, which is why such values are usually higher in urban areas than rural areas. The local adjustment factor, which I will outline in more detail, will give local authorities the power to vary the amount of tax they collect so as to better align the tax to local needs.

Part 1 which comprises sections 1 and 2 contains the Short Title, commencement provisions and interpretation sections.

Part 2, comprising sections 3 to 10, provides for definitions of "relevant residential property", on which the tax will be chargeable and that certain properties will be regarded as not relevant residential properties and, therefore, exempt from the tax. These include properties fully subject to municipal rates; properties which have been vacated by the owner for at least 12 months due to mental or physical infirmity, certified by a registered medical practitioner; properties which have been vacated by the owner for less than 12 months, where a registered medical practitioner is satisfied that the owner is unlikely at any stage to resume occupation of the property and where the property remains unoccupied; registered nursing homes; newly constructed but unsold and unoccupied residential property; properties, the ownership of which is vested in a public body or an approved charitable body and which are used to provide accommodation to people with special housing needs such as the elderly or people with disabilities; property purchased by a first-time buyer as a sole or main residence between 1 January 2013 and 31 December 2013. These will be exempt until the end of 2016; new and previously unused properties that are purchased from a builder or developer between 1 January 2013 and the end of 2016, will also be exempt until the end of 2016; and, properties in certain unfinished developments, or 'ghost estates', as prescribed by law by the Minister for the Environment, Community and Local Government.

The Government is conscious of the very real costs and difficulties faced by people whose homes have been affected by pyrite. My colleague, the Minister for the Environment, Community and local Government has indicated that he considers that houses demonstrated to be subject to a certifiable level of pyritic heave should receive a waiver from the local property tax. I propose to address this issue in the context of the Finance Bill. In addition, the tax will not be charged on mobile homes, vessels or vehicles. If one lives in a yacht one will not pay property tax.

Deputy Michael McGrath

That is very good.

Deputy Michael Noonan

Part 3, made up of sections 11 and 12, contains the rules regarding liable persons. In general, the liable person will be the person who is the owner of the property. A person with a leasehold interest is liable if the term of the lease can equal or exceed 20 years or where a person has a life interest in the property. In the case of property held under trust, the trustees and beneficiaries are jointly and severally liable for the tax. Where the property is occupied rent-free on a long-term basis but there is no proof of ownership or documentation establishing the interest that the occupier holds in the property, the occupier may be regarded as the liable person.

Part 4, comprising sections 13 to 21, contains the charging provisions of the Local Property Tax Bill. The first valuation date will be 1 May 2013 and the valuation on this date will be valid from 2013 to 2016 inclusive. Thereafter, the valuation date that will apply will be 1 November in the year preceding each three year period so the valuation date for the period 2017 to 2019 will be 1 November 2016. Where the liable person changes between valuation dates - that is, where the property changes hands - the chargeable value will continue to apply to the new liable person.

Section 15 provides that where a liable person makes a self-assessed valuation in accordance with guidelines issued by the Revenue Commissioners and pays the annual amount of tax due, the Revenue Commissioners will not seek to replace this self-assessment with a Revenue assessment. This provision will not apply where the chargeable value of a property exceeds €1 million.

Section 16 contains the charging provisions for local property tax. The tax will be introduced in 2013 and will be payable by the liable person. Joint owners will be jointly and severally liable for the payment of the tax. The Revenue Commissioners may pursue one of the joint owners for the full liability. Payment by that person discharges the debt to the Revenue Commissioners of all of the jointly liable persons.

Section 17 sets out the methodology for calculating the local property tax payable for a residential property. The section contains a table with an initial valuation band of €0 to €100,000 plus 18 valuation bands of €50,000 from €100,000 to €1 million and the respective mid-point for each valuation band. A rate of 0.18% is applied to the mid-point of a valuation band to determine the tax payable. If the market value of a residential property exceeds €1 million, a rate of 0.18% applies to the chargeable value up to €1 million and a rate of 0.25% applies to the remainder of the chargeable value over €1 million, with no banding applied. As I stated on budget night, the rates of local property tax will not be changed for the lifetime of this Government. The tax payable in 2013 will be half the full year rate.

Section 20 enables local authorities to increase or decrease the rate of local property tax by a local adjustment factor which cannot exceed 15% above or below the national central rate. The extent of this variation will solely be a matter for the relevant local authority. However, the Minister for the Environment, Community and Local Government may make regulations regarding the setting of the local adjustment factor. Such regulations could cover matters to which local authorities should have regard when setting a local adjustment factor, public consultation procedures and other procedural matters deemed necessary by the Minister.

Part 5, which comprises sections 22 to 26, contains the standard care and management provisions for Revenue, including the four-year time limit on repayments, delegation of functions to authorised officers and allowing for electronic means of return. Part 6, covering sections 27 to 32, deals with the register of properties to be maintained by Revenue, including the obligation of liable persons to register with the Revenue Commissioners by making a return.

Part 7, made up of sections 33 to 46, relates to the making of returns of local property tax to the Revenue Commissioners. As indicated, the Bill provides for a self-assessment system and allows for electronic submission of returns by owners of multiple properties and for submission of returns by agents and lessees. This Part also provides that a failure to submit a local property tax return will lead to surcharges for late submission of income tax and corporation tax returns.

Part 8, comprising sections 47 to 60, deals with Revenue estimates and assessments. Revenue will make an estimate of the amount of local property tax due in respect of a property and will notify the liable person. Revenue may amend this assessment if it subsequently considers it to be excessive or insufficient. If a liable person does not submit a local property tax return containing a self-assessment of the local property tax payable, the Revenue estimate will become due and payable. Revenue assessments will be subject to the normal appeal procedures.

Part 9, comprised of sections 61 to 63, contains the usual appeal procedures for taxes under the care and management of the Revenue Commissioners.

Part 10, which covers sections 64 to 118, contains provision for the deduction at source of the local property tax from Irish wages, salaries and pensions, from certain payments made by the Department of Social Protection and from certain payments made by the Department of Agriculture, Food and the Marine. This part also provides that the deduction-at-source provisions may, by order of the Minister for Finance, be extended to cover payments made by other Departments or State bodies. Deduction at source from salary or other regular payments will probably be the most convenient method of payment of the local property tax. Where an employee opts to have the tax deducted from his or her salary, employers will be obliged to pay the tax to Revenue in the same way as income tax and PRSI are paid.

Part 11, comprising sections 119 to 129, includes the collection and enforcement provisions for the tax, including the due date for payment, the application of the collection and recovery provisions in the Taxes Consolidation Act 1997 to the local property tax and provisions allowing for payment to be made to payment service providers. This Part provides that any unpaid local property tax will continue to be a charge on property and that unpaid tax will be payable on the sale of that property. It also provides that an individual will not receive a tax clearance certificate if he or she has not paid local property tax unless the individual qualifies for a deferral.

Part 12, which includes sections 130 to 139, provides for deferral of payment of local property tax in the case of properties occupied as a sole or main residence. The income thresholds for a full deferral will be €15,000 for a single person and €25,000 for a couple, whether married persons, civil partners or cohabitants. A person may claim a deferral if their income will not, "as can reasonably be foreseen at the liability date" exceed these thresholds in that year. A deferral of up to 50% of the local property tax liability will be possible where the gross income of the liable person does not exceed €25,000 for a single person or €35,000 for married persons, civil partners or cohabitants.

An increased income threshold applies in the case of properties occupied as a sole or main residence and subject to a mortgage. In such cases, the gross income thresholds may be increased by 80% of the mortgage interest payments. A deferral option in qualifying cases in this regard will apply until the end of 2017 and will assist individuals currently in mortgage distress.

Where a liable person no longer satisfies the necessary conditions, amounts deferred prior to the date on which eligibility ceased may continue to be deferred. Where the spouse or partner of a liable person dies and the income thresholds for a deferral are no longer satisfied, deferral may continue until the next valuation date. Where a property is transferred by way of a gift or inheritance, the Revenue Commissioners may allow an existing deferral to continue if the recipient of the gift or inheritance would in his or her own right be eligible and makes a valid claim for a deferral. Full or partial payments may be made against deferred amounts. Deferred amounts become payable on the receipt of windfall gains such as an inheritance. Simple interest of 4% per annum will apply to any amounts deferred.

Part 13, made up of sections 140 to 144, includes the standard Revenue powers provisions, including the right for Revenue officials to make inquiries about property and its ownership and inspection of relevant records. Part 14, comprising sections 145 to 150, deals with offences and penalties. A maximum penalty of €3,000 applies for failure to submit a true and complete return. A similar penalty applies for knowingly making a false statement for the purpose of obtaining any advantage to which the person is not entitled. Interest on late payment of the tax is at the standard Revenue rate of 8% per annum.

Part 15, covering sections 151 to 153, provides that certain persons and bodies will be obliged to supply information on residential properties to the Revenue Commissioners when required to do so, including providers of gas and electricity, An Post, the Minister for Social Protection, the Minister for Agriculture, Food and the Marine and local authorities. The information from these bodies will assist in compiling the register of residential properties.

Part 16, comprising sections 154 to 156, contains provisions in regard to the household charge. The household charge will no longer be payable from 1 January 2013. Arrears paid before 30 April 2013 will be capped at €130. Amounts outstanding after 1 July 2013 will be increased to €200 and added to local property tax due on the property, to be collected by the Revenue Commissioners. This is an important assurance for people who paid the household charge that non-payment of the charge will not be ignored and that arrears will be collected by the Revenue Commissioners.

Part 17, covering sections 157 to 159, contains various supplementary provisions, including a provision for payment of local property tax by the Minister for Finance into the Local Government Fund from 2014.

I thank the officials of my Department and the Revenue Commissioners who worked to produce this Bill. I also thank officials of the Department of Social Protection, the Department of Agriculture, Food and the Marine, the Department of the Environment, Community and Local Government, the Local Government Management Agency, the Property Registration Authority and other Government agencies, who have worked on matters relating to the introduction of the tax, both on the interdepartmental expert group and on the group chaired by Revenue to prepare for the introduction of the tax.

The key objective of the Government is to support the creation of jobs and this was evident in the supports that I included in last week's budget for SMEs and for the different sectors of our economy. The local property tax will broaden the tax base that funds our vital public services in a manner that does not directly impact on employment. The tax is also structured to adhere to the Government's other key objective to be fair and progressive - the wealthiest will pay the most.

It is unfortunate that so far in the budget debates the Opposition has failed to propose realistic positive measures that support job creation. The Opposition has resorted to opposing many of the key elements of the budget that are necessary to bring about the fiscal stability that is essential for long-term economic growth and job creation. Unfortunately, Opposition Members appear to be engaged in opposition for opposition's sake. Fianna Fáil is opposing a commitment it made in Government. Sinn Féin is opposing a tax that it uses for the funding of public services in Northern Ireland. The left-wing representatives here are opposing a tax that is at the very core of Marxist teaching - a tax on capital assets.

Deputy Mick Wallace

It is a joke.

Deputy Thomas P. Broughan

The Minister is a Marxist now.

Deputy Michael Noonan

I encourage the Opposition to join the Government in suggesting positive measures that will support job creation and secure the funding for public services. I commend the Bill to the House.

Deputy Tom Hayes

Deputy Clare Daly looks a little rattled.

Deputy Phil Hogan

Deputy Wallace is not left wing.

Deputy Michael McGrath

I wish to share time with Deputy Cowen.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Michael McGrath

I reiterate our opposition to the Bill being rammed through the Dáil with such haste. That Second Stage is being guillotined today and Committee and Remaining Stages are being pushed through on Tuesday, which is unacceptable and unnecessary. This tax will come into effect, as such, on 1 July 2013. I see no logical reason for this House not to consider this Bill in its own time in January. It should give detailed consideration to amendments and have the necessary legislation, if that is the Government's choice, in good time for it to be established. There is no justification for what is proposed, particularly given that the Thornhill report was only published last Friday. The legislation was only published last Friday even though the Government has had the Thornhill report - which has sat in the office of the Minister for the Environment, Community and Local Government, Deputy Hogan - since last June, as I understand it.

The initial deadline given to the Opposition for the submission of amendments was 11 a.m. on Wednesday, 12 December - two days before the Second Stage commenced. That was a joke and an insult. Eventually that was extended and amendments now need to be tabled by close of business today and will be taken in the House on Tuesday. There is a better way for us to do our business. We need to show some more maturity in how we conduct our affairs. The Bill could be properly debated in the fullness of time without impacting in any way on the Government's budgetary arithmetic.

The Minister, Deputy Noonan, concluded his speech by saying: "This tax is also structured to adhere to the Government's other key objective to be fair and progressive - the wealthiest will pay the most." That is simply not the case.

In the case of two neighbouring properties, for example, one of the households might have an annual income of €200,000, say, while the other might be relying on jobseeker's allowance. Despite this huge discrepancy in income, both families will pay the same amount in property tax under the proposed system because their houses have the same value. That is absolutely not fair or progressive. The Minister is wrong in his claim that the wealthiest will pay the most under the local property tax charge. If the charge were based on net wealth, which would take account of ability to pay and the amount of the mortgage relative to the value of the property, he might have some argument. The way in which the charge is structured, however, certainly does not ensure that the wealthiest will pay the most.

I do not want to use up too much of my speaking time on the politics behind this proposal, but I must challenge the Minister on a particular point. When I debated with him on "Primetime" on budget night last week, he denied that Fine Gael had stated its opposition to the introduction of a property tax in its election manifesto last year. That is patently untrue. That manifesto stated:

[An] annual, recurring residential property tax on the family home is unfair... What will be viewed as fair in south Dublin might be viewed as unworkable in rural Clare... [We] will empower local authorities to put in place, following the 2014 local elections, fairer alternatives to Fianna Fáil's and Labour's recurring annual tax on the family home.

The manifesto gave an undertaking that there would be no additional local taxes and that local authorities might have to curtail services if necessary, introduce increased local user charges for waste or impose a local site sale profits tax on the profit made from the site value on the sale of a residence. That is what Fine Gael proposed before the general election, indicating that these measures would be "both fairer and more economically sensible than an annual recurring property tax". That manifesto was written in full knowledge of the memorandum of understanding already in place with the EU-IMF-ECB troika.

The Labour Party adopted a different tack, indicating its acceptance that a site value charge should be introduced. It was of the view, however, that this could not be done before 2014. The party's manifesto went on to state that such a charge would have to take account of the variation in the value of properties between different regions and the need to exempt some categories of home owner. Consideration was also to be given to those who had recently paid large sums in stamp duty and householders in negative equity. The Bill before us today takes no account of these factors. Both of the parties in power received no mandate from the Irish people to introduce the tax we are discussing today. Anybody who reads both parties' manifesto will be absolutely clear on that point.

The key concern regarding the proposed local property tax is that no account is taken of ability to pay. It is a charge that will have the greatest impact on low and middle-income families and those who are already struggling to pay their mortgages and other bills. A family with a gross income of anything over €480 per week, or €25,000 per year, will not be entitled to a full deferral and only those with a gross income of less than €673 per week can avail of a half-rate deferral. These thresholds take no account of any financial commitments that an individual household might have, household size or ability to pay. This is the fundamental flaw that runs right through the legislation.

In addition, there is no consideration of the size of the mortgage relative to the value of the property. The Government is proposing that people who are deep in negative equity - who have, for example, a mortgage of €250,000 or €300,000 but whose home is worth only €150,000 - will be required to pay this tax. That type of shortfall between mortgage and home value is not uncommon given the scale of the collapse in property prices. Absolutely no consideration is being given to home owners who find themselves in such circumstances despite the promise made to them by the Labour Party in the election last year. For these people, the property tax is a charge on a net liability - effectively, a tax on debt. This is deeply unfair and unjust and should be rectified.

The issue of mortgage arrears is central to this debate. Yesterday the Central Bank released more sobering statistics illustrating the extent of the crisis in this regard. It is now the case that one in four family home mortgages are in some level of distress - that is, the home owners either are in arrears or have had their loans restructured. That is a phenomenal statistic and it does not take into account those who are just about managing to meet their repayments. These issues should be front and centre in this debate. The property tax is being foisted on families who cannot afford or are barely managing to pay their mortgages every month. In some cases, it will come down to a choice between paying the tax and making a mortgage payment. What is the Government advising that home owners in that position should do?

One must consider these proposals in the totality of budget measures. For instance, a family with three children and a home worth a little over €200,000 will face a property tax of €405 in a full year while losing €420 in child benefit and, if it is a one-income household, an increase of €264 in PRSI. That amounts to a loss in income of €1,100. Moreover, all of these measures will apply irrespective of household income. In other words, a family with an income of €25,000 or €30,000 will take the same hit as families with much higher incomes. It is beyond belief that the Government would seek to impose such taxes and charges in a regressive way. Moreover, the property tax must be considered alongside all of the other measures in the budget. One does not have the full picture until one sees the cumulative impact of the entire package of cuts and charges. The figures I have given do not include the other charges people will face next year, including the increase in motor tax and the raft of other measures included in last week's budget. When one adds them up, the family in my example is facing a loss of income of well over €1,000.

The information released by the Central Bank yesterday shows a worrying trend with regard to mortgages, with the rate of arrears having doubled since the Government came to office. I accept that there is, of course, a time lag after the loss of a job during which people will use any savings they have before they end up in an arrears situation. However, at the time the Government came to office the headline rate for those in arrears of 90 days or more was 5.7%, or 44,500 households. Yesterday we discovered that this had increased to 11.3%, amounting to 85,000 family home mortgages. Rather than being contained, as the Government claims, the mortgage arrears crisis is out of control. Some 29% of family home mortgages, in value terms, are currently in distress and close to 500,000 people are living in houses for which the mortgage is in trouble. If we cover nothing else in this debate, we must at least confront that issue. These people are being given no meaningful respite in respect of the property tax as currently proposed.

In the years 2003 to 2009, the average stamp duty payment per transaction on the purchase of a home was just over €20,000. I acknowledge that the Thornhill report recommended that people not be given any credit for stamp duty paid in recent years. The Commission on Taxation, however, did recommend that such a credit be given against property tax liability. No provision to that effect has been made in the Bill.

That is deeply unfair. The principle of exemptions is established in the Bill. The Minister is exempting people who buy a new house now or who will buy a property in the near future. If Fianna Fáil did that, it would be said that it was a bailout for builders and developers. However, the Government is doing it. It is exempting people who are supporting the construction industry by way of purchasing a property, but it is not exempting people who simply cannot afford to pay this tax. The reality is that many people will not be able to afford to pay it.

I note the Minister does not propose to carry over directly the list of estates currently exempt from the household charge. He is going to draw up a new list which takes account of factors listed in the legislation. I hope it is done in a much fairer way than the current list has been done because we can all cite anomalies in our constituencies of estates that are not exempt that should be. There are examples of estates also that are substantially complete but where an exemption is currently afforded.

Some of the powers extended to Revenue by way of the Bill are draconian. People in receipt of social welfare as their sole means of financial support could well have an undefined amount deducted from their weekly payment on foot of the property tax. Similarly, the Minister is placing an onus on employers who are currently administering the payroll system to deduct the property tax from people on PAYE.

We oppose the Bill. We believe it is fundamentally unfair. It is regressive and will hit low and middle income families and people on social welfare. The Bill does not take into account in any meaningful way one's ability to pay or net wealth. That is what is at the core of the debate. That has been the essential failure of Government in framing this idea. It is the wrong tax at the wrong time. The country cannot afford to bear it and the Government must go back to the drawing board, look at some of the constructive suggestions we made in our submission, and not proceed with the tax.

Deputy Barry Cowen

Let us make no mistake, this steam-rolled Bill is the moment when thousands of families across the country, already struggling to make ends meet, are pushed over the edge. It is the moment when Fine Gael and Labour put another nail in the coffin of their own credibility, as they betray yet another pre-election promise to the Irish people. It is the moment when the domestic economy is dealt yet another staggering blow as it struggles to its feet. It is simply the moment when the Government introduces the wrong tax at the wrong time. Fianna Fáil is opposed to the introduction of this deeply unfair property tax on the family home. The Government's proposal for a property tax will hit struggling home owners at a time when they can least afford it. Now is simply not the time to inflict an unfair property tax on a struggling economy, weak housing market and home owners working just to keep their families afloat.

It is important also to rubbish the lines peddled by desperate Ministers attempting to avoid responsibility for their decisions. That has been going on all week. The property tax is a political decision by the Government which breaks its pre-election promises. It is not written in stone by the EU-IMF programme of financial support. Our meetings with the troika have clarified that it is only interested in the bottom line of fiscal adjustment, not a rigid set of proposals. The choice to introduce a property tax is being taken by the Government, and no one else, instead of other options at its disposal.

As my colleague Deputy Michael McGrath said, Fianna Fáil has put forward a fully costed budget proposal based on data from the Department of Finance that does not hammer home owners with a property tax and meets our budget adjustment requirements. The Government has chosen, for example, not to introduce a 3% increase in the universal social charge, USC, for those earning more than €100,000. Instead, it has opted for spin over substance with a "mansion tax" gimmick that has all the depth and research of an idea that somebody in the Labour Party office read about in the Financial Times the weekend before the budget and decided to cut and paste it.

For ordinary families who will find themselves paying an average of €315 on a standard three-bedroom home, all the half-baked plagiarism in the world will not help them balance their already struggling family finances. For them, as my colleague Deputy Michael McGrath has alluded to, the only regret they have is that it was not a copy of the Fine Gael manifesto or the Labour manifesto that was available to the Cabinet when they came up with this half-baked idea. Instead, they had a few crumpled copies of the Financial Times, as they scoured for a desperate measure to cover up the clear breach of their promises with a direct tax on the family. The Government decided to hit family homes. It decided not to provide meaningful exemptions for low-income families. It decided not to help the thousands laden down with mortgage arrears. It was the Government, and no one else, that made the decision in that regard.

This is a tax that will be sharply felt across the length and breadth of the country. For example, in my home county of Offaly where property prices are lower than the national average, ordinary families will still be harshly penalised, at the worst possible moment, for working hard and building up a family home. These are families that are struggling in the middle of a recession and battling against mortgage arrears. Figures released by the Central Bank yesterday show that almost one in four family home mortgages are either in arrears or have already been restructured. That confirms Fianna Fáil's view that the introduction of a property tax at this time is a major mistake. The reality is that 180,000 mortgage holders are experiencing difficulty in repaying the mortgage on the family home. These people will now be hit by a hefty charge on the same family home. One could ask what is the logic behind introducing a property tax on people already struggling to pay the mortgage. The truth is that a huge number of families will simply not be able to pay the property tax.

Last year, in similar circumstances, the Government rammed the household charge Bill through without proper scrutiny and it quickly descended into a farce. There was the botched implementation of the charge and the failure of the information campaign, the insufficient range of exemptions and the wide-scale boycotts that had all the hallmarks of a poorly conceived and dreadfully executed charge. Those who do not learn from history are condemned to repeat it and the Government has once more decided to push a Bill through without giving this House adequate time to scrutinise it. One could ask whether we will, once more, see the small details coming to the fore and undermining the Government and the Bill. For example, the decision by the Government to impose the property tax on local authority housing goes directly against the advice of the Thornhill report. Even last year's botched household charge had an exemption for social housing. More than 130,000 homes across the country are rented from local authorities, some 1,700 in County Offaly. Those families will see their annual rents hiked up to pay the tax but thousands of local authority homes are already in rent arrears. For instance, Dublin City Council is owed more than €20 million in overdue rents. Those tenants are people whom the State needs to support in order to provide adequate, reliable accommodation at an affordable price. Yet the Government is hitting them with a rent hike they simply cannot afford. The local authority in question will be left to pick up the bill and in the same way as happened following the household charge fiasco, local services will suffer.

The much hyped financial independence of local authorities that the Minister for the Environment, Community and Local Government, Deputy Hogan, has spoken about will be badly damaged by a housing section that becomes an increasingly unsustainable burden on council revenues. Voluntary housing associations, on which the Government has placed great emphasis for the future provision of social housing and to tackle the 100,000 long waiting list, will also be hit by the tax.

It will sap their financial capacity, increase difficulties in respect of rents and limit their capacity to maintain existing stock - not to mention build new houses - into the future. It is a direct contradiction of expressed Government policy to cripple these voluntary housing associations with a tax that will undermine their ability to pursue the goals the Government has set them. In the months and years ahead these flaws will become all too apparent as the contradiction between the Government's housing policy and its property tax comes to the fore.

I have referred to the harsh impact of the tax on ordinary families, those who are struggling with mortgage arrears, people living in social housing and the organisations which help ensure there is adequate provision of housing for those of all needs and means throughout Ireland. There is another group that will be hit by the tax, namely, the elderly. These are the people who spent their working lives building and keeping their family homes. When they started out, they aspired to having a small corner of the world they could call their own, somewhere to settle down and start a family. Through good times and bad, they strove to get the money together to buy homes and toiled away to keep them. They took pride in rearing their children in warm and welcoming homes they worked hard to maintain. Now their working lives are at an end and they are looking forward to the rest and joy of a well deserved retirement. Their children have mostly left the nest to go and start homes of their own which reflect those their parents worked so hard to provide. The incomes of those to whom I refer are fixed and those on private pensions have suffered from the impact of the economic downturn. The property tax is going to have a direct impact on these elderly pensioners who will be punished in the autumn of their years for working hard in order that they might have family homes. The pride they took and the sacrifices they made are now being used against them. They will find themselves punished for the location and size of the homes for which they worked in a different time. The Minister's statement to the effect that they can defer the tax until they pass away means that it is nothing more than a "death" tax for them.

As Deputy Michael McGrath stated, despite the limited time allocated for this debate, we have always believed there is an obligation on the Opposition to put forward meaningful alternatives and offer viable suggestions. Opposition alone is not enough and we are giving the Government the opportunity to at least amend the worst aspects of the Bill. Fianna Fáil is tabling a series of amendments that would alleviate pressure on social housing, those in negative equity or mortgage arrears and families whose homes have been affected by pyrite. We hope this would go some way towards alleviating the impact of the property tax which is the wrong tax at the wrong time.

In recent days some savage measures against the vulnerable have been introduced. In this regard, I refer, in particular, to the budget which is marked by its gross unfairness and mean spiritedness. The property tax is another addition to the ever growing list of broken promises and harmful measures. It is one for which the people of Ireland will pay dearly. We are opposed to the Bill because it imposes the wrong tax at the wrong time. Our amendments offer the opportunity to try to take the worst out of it. However, the question arises as to whether Fine Gael and Labour Party Deputies will do at least this much to blunt the blade of this severe tax before it is plunged into the heart of families.

An Leas-Cheann Comhairle

I call Deputy Pearse Doherty who is sharing time with Deputy Brian Stanley.

Deputy Pearse Doherty

Yesterday two truly shocking documents landed on my desk. They also landed on the desk of every other Deputy in this House and those of Senators. The first of these documents includes the Central Bank's residential mortgage arrears and repossessions statistics for the third quarter of 2012, while the second is the Society of St. Vincent de Paul’s response to budget 2013. Anybody who is considering supporting the Government's family home tax should read these two very short reports. When they have read them, they should ask how the Government expects families that are already struggling to get by and pay their bills will be able to pay the so-called property tax next year and in subsequent years.

The figures contained in the Central Bank report to which I refer reveal that one in every four mortgage holders is in distress. When one adds those who are in arrears and whose payments have been restructured, one discovers that some 179,370 homeowners were unable to pay their mortgages at the end of September. That is a massive number and it continues to rise. Between July and September, 115 new families fell into mortgage distress each day. As a result of this, the current position is that 23.5% of all residential mortgages are in distress. If the Bill is passed, these are the individuals the Government will expect to pay the family home tax. One out of every four people with mortgages cannot meet his or her repayments and the Government expects him or her to pay a new tax on his or her home. That does not make sense.

The Society of St. Vincent de Paul report states "Budget 2013 once again placed the heaviest burden onto the shoulders of people who are struggling" and that "those who have already borne the brunt of cutbacks are unable to take any more". It details four case studies of how the budget will impact on the household incomes of four typical families. It shows how cuts to child benefit and the back to school clothing and footwear allowance, the increases in prescription charges, carbon tax and motor tax and the introduction of the family home tax will leave many of the State's poorest families worse off by up to €1,000. These are the people the Government expects to pay the family home tax if the House allows this measure to be enacted.

When one reads the reports of the Central Bank report and the Society of St. Vincent de Paul consecutively, one can only reach a single conclusion - that, thanks to the measures introduced by Fine Gael and the Labour Party in the budget, 2013 will be the worst year of the mortgage crisis to date. Next year is the one in which the Government wants to introduce a family home tax. Are those in government mad? Have they lost their senses? Do they not understand what the reports to which I refer are telling them? One in four of the people about whom I have been speaking cannot pay his or her mortgage. This means that there is a risk that they could lose their homes. Instead of developing solutions, the Government is now asking them to pay tax on their homes at a time when they cannot meet the mortgage repayments on those homes. That does not make sense. The Government is failing to understand the extent to which ordinary people will be unable to pay these new charges.

As Deputy Michael McGrath stated, when Fine Gael and the Labour Party were in opposition, their views on this matter were very different. In 1994 the Taoiseach opposed the introduction of a property tax and stated, "It is morally wrong, unjust and unfair to tax a person's home." I agree. During the most recent general election campaign the Tánaiste, Deputy Eamon Gilmore, promised not to introduce a property tax on residential homes and stated, "We have to remember that many people have already paid a property tax on their residential home." In this regard, he was obviously referring to stamp duty. Many paid over tens of thousands of euro in the form of stamp duty, but the Government does not care about this. It wants to hit them again, even though they have already made their contribution. During last weekend's edition of "The Week in Politics" we received an insight into Government thinking when the Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, commenting on broken promises, stated, "Isn't that what you tend to do during an election?" It is clear that neither Fine Gael nor the Labour Party ever had any intention of living up to the words they had uttered during the election campaign. There is only one thing I can say about this matter - those in the parties to which I refer are absolute hypocrites and were completely cynical about what they said in order to get into office.

The House is now debating a proposed tax on the family home introduced by the Tánaiste,Deputy Eamon Gilmore and the Taoiseach, Deputy Enda Kenny. The proposal is not a property tax. A real property tax would include all assets and stocks and shares. It would include homes, land, yachts and art collections. It would be a tax on wealth. However, this Government is not in the business of taxing wealth or the wealthy. It is in the business of taxing those who are least able to pay. In many cases and for many people, this will be a tax on a liability, on a debt. The family home tax seeks to impose a charge on every single family home in the State. There are no exemptions for the one in four mortgage holders in mortgage distress. There are no exemptions for the hundreds of thousands of mortgage holders in negative equity. There are no exemptions for the tens of thousands of mortgage holders who paid tens of thousands of euro in stamp duty during the boom. Yet Fine Gael and Labour have decided that these are the people who must pay more. The Government has also ignored the advice of its own expert group - social housing, local authority housing and voluntary association housing are to be liable to pay the tax. There is little doubt that local authorities and housing associations will feel compelled to pass on this extra charge to their tenants. Therefore, tenants who do not even own their own homes will end up paying the family home tax by the back door in the form of increased rents.

Some Deputies and Ministers, particularly in the Labour Party, argue that the family home tax is progressive, that it is the kind of tax that left-wing politicians should support. Nothing could be further from the truth. I heard the Minister for Finance make the claim that left-wing politicians support a tax on assets. Perhaps the Minister might riddle me this. If I have debt on my asset which is my home, of €300,000 and my asset is only worth €200,000, can it be called an asset? Is it an asset or a liability? Deputy Peter Mathews, the banker, might be able to give the answer. It is clear in such a case that the Government is taxing a debt or a liability.

This Bill is very clear that we all must pay, irrespective of our ability or income. There are no exemptions for those on social welfare, no exemptions for those living in or at risk of poverty, no exemptions for those living in or at risk of poverty and no exemptions for those living with unsustainable debts. The only facility provided for those who will be unable to pay is to seek a deferral of the tax. This measure is available only to those on the very lowest of incomes, at €15,000 per year for a single person and €25,000 per year for a couple. Even in these cases the Government has decided to punish people. A person who cannot afford to pay and who successfully secures a deferral, will have to pay an interest penalty of 4%. Even worse, if a person cannot afford to pay and is unable to secure a deferral, the Government will charge an interest penalty of 8%. One of the most shocking elements of the legislation is the proposal to deduct the family home tax at source for those unable to pay. Extensive powers are given to the Revenue and to various Departments to have the family home tax deducted from a person’s wages, from social welfare payments, pension payments, farm payments and other State payments. No consideration is given to the impact such deductions could have on the financial stability of the household. What if a deduction at source were to push a family into poverty and with it the children in that family? What if a deduction at source were to leave a family without food or a pensioner without heat? The legislation is silent on this. The Revenue is not required to take such matters into account. All Fine Gael and Labour care about is making people pay – even if paying means going without food, heat or other essentials.

This is a bad and deeply unfair tax. It is unworkable and will be the cause of hardship for hundreds of thousands of families. While the Taoiseach and Deputy Eamon Gilmore are clearly happy to break their pre-election promises, it is not too late for the backbenchers opposite to take a principled stand.

Fine Gael and Labour are not the only parties guilty of hypocrisy on the issue of the family home tax. The leader of Fianna Fáil and its spokespersons have some cheek to argue against the Government’s proposal. We all know that if Deputy Micheál Martin and his Fianna Fáil gang were in government, this tax would have been introduced this year. The Fianna Fáil Government had included it in its four-year plan before the troika even arrived on our shores. We all know that Fianna Fáil negotiated the first memorandum of understanding with the troika. That agreement contained a clear commitment to introduce a property tax for budget 2012 as part of a revenue-raising package of €1.6 billion. Indeed, Fianna Fáil’s pre-budget submission last year included a proposal for a property tax to the value of €120 million. Ever the opportunists they are now opposing the very tax they proposed and advocated. Fianna Fáil Deputies say this is the wrong time and the wrong tax. The only wrong time for them is that they are not sitting on the other side of the House so that they could implement it with relish.

Fianna Fáil Deputies argue that this is the wrong time to introduce such a tax because of the mortgage crisis. There was a mortgage crisis in 2010 and in 2011. This crisis did not fall out of the sky last night or the night before or even in the last six months. Was Fianna Fáil not aware that hundreds of thousands of families were struggling under the weight of the economic crisis created by Fianna Fáil and the four austerity budgets introduced by the party? Fianna Fáil bumped up and fuelled the property boom in order to bail out its developer friends. Did the party not know that this would end in tears, as Morgan Kelly and others warned even before the crisis happened? There is never a good time to introduce a property tax. There is no doubt that if Deputy Micheál Martin were Taoiseach he would be faithfully implementing the troika agreement negotiated by the Cabinet of which he was a part.

Sinn Féin has consistently argued and campaigned against the introduction of a tax on the family home. We have also proposed credible alternatives which would allow the Government to raise the revenue it needs in a way that does not punish struggling families or hurt the domestic economy. Last month I published a wealth tax Bill. My proposal is for a real property tax, a tax on all personal wealth. There are two key tests for any new tax measure: whether the tax is fair and whether people will be able to pay it. Sinn Féin’s proposal meets both of these criteria: the Government's proposal meets neither.

Across Europe, countries struggling to reduce deficits and to raise revenue for investment in public services and job creation are turning to what are truly wealth taxes. France, Sweden, Norway, Finland and Iceland successfully operate wealth taxes. In France, the socialist government has recently strengthened its existing wealth tax legislation and expects to double its yield next year. In Spain, the conservative government has reintroduced its wealth tax. In Germany, SDP, the leading opposition party and sister party of the Irish Labour Party, has drafted wealth tax legislation with a promise to introduce it if the party is successful in next September’s general election. In Britain, the Liberal Democrats is currently advocating the introduction of such a tax. Wealth taxes are fair, they can be implemented and they are good for the economy. Sinn Féin’s wealth tax proposal is based on aspects of the taxes currently in operation in France and Sweden. The family home tax takes no account of people’s ability to pay. Sinn Féin’s proposal would levy a 1% tax on those with net assets in excess of €1,000,000. The family home tax will place a significant burden on the Revenue.

Sinn Féin's wealth tax would be self-assessed and apply only to those with considerable wealth. It would, therefore, be cheaper to administer. The family home tax is on the gross value of the property, whereas, with Sinn Féin's proposal, all debts and liabilities would be taken into account.

There are almost no exemptions from the Government's family home tax, but Sinn Féin's proposal includes a considerable range of exemptions. The family home tax ignores the fact that there will be those who are asset rich and income poor. Sinn Féin's proposal, by contrast, includes safeguards for such cases.

The family home tax is designed to hit 1.9 million homes, irrespective of the financial circumstances of the families therein. Sinn Féin's proposal targets only those who can and should pay. The Government's proposal is unfair. It will push families deeper into financial hardship, debt and poverty and imake the mortgage crisis worse.

The Government's proposal will also hurt the economy. It will take money from those who are keeping the local economy alive. By taking money out of the pockets of those who spend all of their disposable income on local goods and services, the Government will further damage domestic demand. Jobs and tax revenue will be lost and the economy will suffer. The family home tax is bad for citizens, society and the economy. Sinn Féin will oppose it at every stage as it makes its way through the House. If it is introduced, we will campaign for its abolition.

The Government parties, when in opposition, promised that they would not introduce this tax. Once again, they have done a U-turn. It is not just a question of the Government's political shenanigans in the House because it is failing to understand people simply cannot afford to pay the tax. It is impossible for large sections of society to pay. Giving the Revenue Commissioners the power to dip into people's pay packets or social welfare payments is absolutely appalling.

I am sure the Minister of State and his colleagues have received letters of the kind I received in recent days from people suffering under the weight of the budgetary measures introduced thus far. Asking them to pay more is not acceptable. They simply cannot do so. I appeal to the Minister of State, even at this late stage, to consider other revenue generating options. The proposal will yield approximately €500 million in a full year. When one gets rid of the non-principal private residence tax, it will yield approximately €420 million. Sinn Féin has a proposal in this regard that was costed by the Department, that is, unless the Minister of State is willing to say his officials and the Minister for Finance are lying. Our proposal was-----

While Sinn Féin will oppose this tax vigorously, it will propose a raft of amendments to counter the worst elements of this very harsh Bill and try to strengthen it to make it more fair for those on low and middle incomes, those in negative equity and in mortgage arrears and those who simply cannot pay. Let there be no doubt that our objective is to fight this legislation tooth and nail and campaign for the abolition of the tax.

Deputy Brian Hayes

I know that.

Deputy Brian Stanley

This is supposed to be a property tax Bill, but, if we were to be honest with ourselves, we would realise it is not such a Bill but one imposing a tax on the family home. The Bill gives new draconian powers to the Revenue Commissioners, allowing the Government to take money from wages, pensions, social welfare payments and even single farm payments. The powers in the Bill are unprecedented. The financial consequences of the Bill which have been alluded to, with the harsh budget, will force many families, including children, into poverty. They will force an increasing number of families into the arms of loan sharks. In the past 20 months we have seen a seamless transfer of policy from Fianna Fáil to Fine Gael and the Labour Party. Fianna Fáil's national recovery plan for the period 2011 to 2014, produced before the dying days of its Administration, outlined how the party was committed to introducing a household charge of €100 per annum. This was to lead to a property tax yielding a total of €530 million in 2014. It is the politics of Tweedledee and Tweedledum.

Let me use this opportunity to challenge some of the untruths propagated by the Taoiseach and, in particular, the Minister for the Environment, Community and Local Government, Deputy Phil Hogan. The Minister who is not present uses the last minute of each reply at Question Time to propagate misinformation to continue to mislead people about rates in the Six Counties. It is not for me or Sinn Féin, a republican party, to defend the six county state because we are committed to Irish reunification and having a 32 county republic. It is important, however, to know the facts. The Northern Assembly does not have fiscal powers and cannot increase or decrease taxes. Taxation is the preserve of Westminster. Yesterday the Tánaiste and the Minister did not even know that social welfare rates were set in London, on the next island.

Deputy Brian Hayes

It is just as well.

Deputy Brian Stanley

We are trying to change this. If the Minister of State, Deputy Brian Hayes, can give us any help in so doing, we will be glad of it.

We want fiscal independence from London and the support of the Irish Government in this regard. In the Six Counties rates are based on the valuation of one's home. They are used to fund both local and regional services in the North. The position is not dissimilar to that which obtained in this jurisdiction up to 1977. Crucially, in the Six Counties there are considerable reliefs for the disabled, earners of low incomes, recipients of housing benefit, pensioners, and zero and low-carbon homes. There is none of these exemptions in the Government's Bill.

The Northern Ireland Statistics and Research Agency stated the average rates bill in the Six Counties was £789, not £1,400 or £2,000, as stated by the Tánaiste, Deputy Eamon Gilmore. I would have believed his officials would have known this because at times they would have gone north of the Border. If they did not do so to do anything useful, they did so to be involved in debating societies there. Another Minister claimed the rates bill was up to £2,000 in the North. This must be a reference to people who live on the Gold Coast of north County Down. I do not know too many who live there.

Rates allow for the provision of the following public facilities and services: education, including school books, transport and meals; emergency services, including fire services, for which we pay here; health care; housing; roads, on which there are no tolls; water and sewerage schemes; waste collection; desludging of septic tanks; a range of community services; arts events; environmental health services; leisure and tourism facilities; and waste management. By contrast, householders in this State must pay for all of these services separately out of their income.

Now that we have the facts, I want the Minister for the Environment, Community and Local Government, Deputy Phil Hogan, and his fellow Ministers to refrain from spinning untruths about a part of Ireland they obviously do not know anything about. The home tax has been promoted by the Government, particularly the Minister for the Environment, Community and Local Government, as a tax to fund local authorities and their services. The Government's budget, however, continues to starve local government of much needed funding. In a very cynical move, the charges outlined in the Bill will remain at the same level until after the local elections in 2014, at which time they will be increased.

Sitting suspended at 2 p.m. and resumed at 2.30 p.m.

Deputy Brian Stanley

Before the break I outlined the situation in the Six Counties and I am glad it is on the record. It is a pity the Minister, Deputy Hogan, was not in the Chamber to hear it given his misrepresentation of it during the past 12 months.

The home tax has been promoted by the Government and in particular by the Minister, Deputy Hogan, who claims it will be used to fund local authorities and the services they provide. However, in the budget the Government continued to starve local government of much-needed funding. In a cynical move the charges outlined in the Bill will remain until after the forthcoming local government elections in 2014, when councillors will be elected to local government, after which time it will be safe to increase them.

The Department of the Environment, Community and Local Government has again cut funding to local government by 25% and this will further strangle the provision of local services. The local authorities' housing budget has been cut by a massive €46.7 million. This comes at the time of an unprecedented housing crisis. There are 100,000 families waiting to be housed in this State and the Government's response to that is to cut the local authorities' housing budget. The social inclusion capital budget has been cut by €2 million to €4 million and it is worth noting that in 2011 the budget was €9.3 million. Local authorities will be forced to increase the charge to compensate for the cuts imposed by the Government.

In a further attack on the elderly and people with disabilities, the Government has callously cut housing grants by €20 million. This will directly affect those people who depend on housing adaptation grants and housing aid for the elderly, and those with disabilities, who need that grant to continue living independently in their homes. What is most worrying is the blatant disregard for health and safety demonstrated in the further cut in the capital fund for the fire services. The budget now stands at €5 million, down from €12.25 million in 2011, and that must be of concern to everybody.

With one hand the Government continues to slash funding for local government while with the other hand it forces home owners, regardless of income, to compensate their local councils for these cuts. Those on disability payments and low-income families pay the same as the millionaire. The Taoiseach, one of the highest-paid politicians in the world, will be paying the same as the pensioner or those who are disabled, who have just had their telephone and electricity allowances cut. In my constituency of Laois-Offaly 130,000 local authority tenants have been brought into the loop and will face these increases through increased rent. In Laois more than 2,000 tenants will face those increases, while in Offaly more than 1,700 tenants will be crippled by having to pay the new home tax. I know from meeting these people that many of them are in dire straits. The Government is forcing local councils to depend on an unfair tax to fund services that have already been paid for in people's taxes or in direct charges, as I outlined. This is perverse, to say the least.

What makes this Bill even more unjust is the fact that there is no need to introduce it. The Government does not have to impose further punishment on those who have suffered so much and will suffer more on foot of the budget announced last week. It had choices. Sinn Féin gave it some of those choices. In the alternative budget we put forward, we spelt out exactly how the economy could be funded and how things could be turned around without the imposition of this punitive tax. We outlined 12 new tax measures that could raise €2.7 billion in additional taxation and, crucially, how more than €1 billion could be secured in savings by cutting high salaries. The Government could have done this without hitting low- and middle-income households. That is the key point. The proposals were costed based on data from Ministers and their officials. I heard talk in the House last week about fantasy policies by Sinn Féin. Surely the Minister of State is not going to say that the Minister concerned, other Ministers or their senior officials were giving out fantasy figures. He is not going to say that from the opposite side of the House because he cannot say it.

(Interruptions).

Deputy Brian Stanley

That is the fact of the matter. In the Minister's attempt to avoid being held to account, he is ramming this Bill through the Houses before the Christmas recess. That is a desperate action by a desperate Government in order that TDs can go back to their constituencies without feeling heat on this issue over the Christmas. It is a done deal before the Minister leaves the Chamber and that is shameful. We will be opposing this Bill every step of the way.

Acting Chairman (Deputy Seán Kenny)

The next speaker is Deputy Ross, who is sharing his time with Deputies Catherine Murphy, Finian McGrath, Maureen O'Sullivan, Luke 'Ming' Flanagan, Joan Collins, Seamus Healy and Mattie McGrath.

Deputy Shane Ross

That is correct. I am getting very tired and very used to hearing the Government saying that this particular tax is justified on the basis that is broadening the tax base. It is doing nothing of the sort. What this tax is doing is draining those who are already empty of juice. It is hitting those in negative equity, those who have mortgage arrears, those who have already paid stamp duty, which is a form of property tax, and the vulnerable. Many people on this side of the House and on the Government benches, if the truth be known, are shattered by the news that the Revenue Commissioners will be the body specially selected to collect this tax. Why was the Revenue Commissioners selected?

Deputy Olivia Mitchell

Because it is good at it.

Deputy Shane Ross

It was selected for one reason and one reason only: because the tax cannot be collected any other way. There will be resistance to the payment of this tax on the very justifiable basis that people cannot pay it. The only way to get money out of people who cannot pay is by extortion. One extorts it quite simply by saying it is going to come out of people's pay, because they cannot pay it any other way, and it will come out of people's social welfare payments, because they cannot pay it any other way. This is an unprecedentedly cruel move against those who will have to make serious sacrifices elsewhere as a result. These are the same people who will lose child benefit, who are in mortgage arrears and who have been hit by the budget in many other ways, yet this tax will be extracted from them at base, at the point at which they cannot make any voluntary decision about whether they can pay it. They cannot resist it.

There will supposedly be what are called deferrals for those in great difficulty. The deferrals are a farce. They are only for individuals with an income of €15,000 or less a year or, in the case of a couple, an income of €25,000 a year - pitiful amounts of money. Those with an income of €16,000 will have to pay this tax. If deferrals are granted in what is a penal measure, people are being told they will have to pay a 4% interest rate on top of the debt they owe, which they cannot afford to pay. What is the point of crucifying the destitute who cannot pay already by saying they will also have to pay a 4% tax on top of that? What will happen is that the Minister will create more debt for people who are already in debt.

It is creating an albatross around the necks of pensioners, who will have to carry it until the day they die. It will force people to sell their houses because they cannot raise the cash to pay this tax also.

This is not a progressive tax but a retrograde one. No one, whatever his or her ideological position, has been fooled by the so-called mansion tax introduced by the Government simply as a sop to the Labour Party to state it was doing something against those who were better off and had larger houses. This does not detract from the fact that the Government is also hitting those on social welfare and middle Ireland again. This is a cross middle Ireland is likely to resist. It will not accept the Government's argument that the IMF and the European Union are the responsible bodies for imposing this tax. It is a voluntary decision by the Government which it did not have to take. There are other sources which it could have taxed or cut.

Deputy Catherine Murphy

According to the Government, this tax is set to bring in €500 million. Let us suppose everyone pays it; it is reasonable for people to ask what they will get for it. What they get is a dysfunctional local government system. Local government fund spending has been reduced from €999 million at its peak in 2009 to €615 million in 2012, a reduction of €384 million or 38%. Local authority revenue streams such as commercial rates have contracted also. This tax will essentially fill the gap.

The historical development of local government shows a pattern of a strong, centralised authority reserving and guarding powers that would be better exercised at local level. During the years reforms have been piecemeal and timid. The Bill, far from being a departure to sustain local government, fits very well into the long line of measures from the Executive to extract funding from citizens without providing any semblance of a local service available in other countries. What is happening here is a smash and grab. The legislation will create monsters of the Revenue Commissioners by pitching them against a significant number of citizens to the point at which it will become an administrative nightmare for the Revenue Commissioners and potentially damage its ability to collect other taxes. It is easy to foresee the stampede of Revenue officials who will seek transfers or opt to leave. This is a very dangerous development.

The campaign of civil disobedience entered into by so many in respect of the household charge has filled the protest vacuum. When this measure is applied, people will see deductions from their wages or social welfare payments which, in turn, will take food off family tables. That will be the straw that will break the camel's back for those who are struggling to keep a roof over their heads.

The only part of the Bill that refers to what is local is the Title. This is a slush fund for the Minister for the Environment, Community and Local Government, who claimed that 65% of the revenue raised should be assigned to the relevant local authority. The other 35% will be distributed to other parts of the country in the same disgraceful and inequitable way the local government fund has been distributed. No developed country that is serious about proper local government goes about it this way. Abroad, local representatives vote on local taxation measures and the money stays in the locality. Here, we do it backwards.

There is a serious risk that section 143 is unconstitutional. I do not believe the family home can be invaded in the way envisaged in the section. I hope the Minister will withdraw its provisions next week.

Deputy Finian McGrath

I reject the Short Title of the Bill, Finance (Local Property Tax) Bill 2012, because this is, in fact, a home tax. In the current economic crisis this unjust tax is unacceptable for householders. As a result, I will be voting against this legislation. In the past, when he was just a Deputy, the Taoiseach said it was morally unjust and unfair to tax a person's home. Now he has done another U-turn.

The average householder is being hammered. Austerity is not working and it is bad for many young families in negative equity. During the week one constituent asked me why he had to pay a property tax when he was already paying other taxes. He outlined some of his other payments such as an annual refuse collection charge of €312, an estate management fee of €179, the television licence fee of €160 and a health insurance premium of €1,200, all of which come to €1,842 per year which is paid out of moneys already taxed. The Government will run the country into the ground unless it accepts the reality that one cannot tax or cut one's way out of recession, as has been proved across the world in different economies.

The Government is squandering taxpayers' money by pushing through excessive salaries for its advisers. However, families of people with disabilities have been hammered through the cut to the respite care grant, while poor families have suffered a cut of €10 to child benefit. Now the Government is bringing in a home tax.

Respond!, the housing association which provides 5,200 units of accommodation nationally, has slammed the legislation which will impose a local property tax on social housing organisations. It believes the tax will jeopardise the future of many of the housing charities across the country that provide accommodation for low-income and vulnerable families. It believes the move is short-sighted and could have long-term negative consequences for the future of social housing.

How dare the Government impose this tax on the people? People have already paid a property tax through stamp duty in the past 20 years. How dare anyone opposite claim this is connected to a wealth tax?

In recent weeks other measures to bring in extra revenue for the State have been proposed. Even some of the Government's backbenchers agree with some of the proposals made. I will be voting against this legislation and call on all Deputies to reject this unjust and unfair home tax.

Deputy Maureen O'Sullivan

Ireland is one of the few countries in the western world which does not have a property tax. There are examples of international best practice of fair ways of assessing and collecting property tax, how best to use it to provide essential local services and how to allow for exemptions and waivers. While everyone was delighted when the old local authority rates were abolished, there is no doubt that it was a regressive step. Abolishing rates was an election promise which was shackled to party-political whims for decades regarding local services. There is no doubt that this contributed to the speculators' property boom and planning corruption which has led us into austerity.

The problem with the property tax is that it is being introduced at the worst time in our history, during a recession when there are so many burdens on struggling families. Many reputable organisations made alternative suggestions to this tax, including the Commission on Taxation's proposal for a site value tax. Market value is problematic owing to mortgage costs being higher than the value of a home. A site value tax could have been considered to provide for more efficient use of land as well as to raise revenue. It might also have played a role in ensuring we did not have another property boom followed by a bust.

A site value tax would have been a better and fairer way of assessing value.

Any measure of taxation should be based on ability to pay. The unfortunate fact is that we have the highest number of non-working households - that is, households without a working adult. We also have the highest level of household debt in the OECD. One in five mortgages is in distress and some organisations tell us that more than half of all adults have less than €100 in disposable income per month. The phrase "like taking blood from a stone" comes to mind.

Let us consider how this tax is supposedly fair. Supposedly, those who own the most valuable properties will pay most. This aspect is being lauded as one of the measures that will hurt the wealthy. However, it is reckoned that only 1% will be liable for the so-called mansion tax. Those in urban areas will pay significantly more for their houses than those with similar houses in rural areas. Older people with small pensions may be marginally above the income threshold of €15,000, which, I believe, is far too low. It is welcome that there is an exemption for people who, for reasons of old age, physical or mental disability or other causes require special accommodation. I believe the exemption should cover local authority housing tenants and tenants in the non-profit social housing sector. Housing associations are exempt in European countries and such bodies and local authorities should be exempt, as recommended in the Thornhill report, because they are in involved with people in low-income families.

In fairness, Dublin City Council has been keeping within budget, but this tax will undermine that. The council cannot impose it on its tenants, who are already struggling to pay their rent and trying to cope with other cuts, including child benefit; the privatisation of waste collection in Dublin Central has also resulted in increased charges, as predicted. Some tenants will come under the special exemption but for other tenants on similar incomes it will not be enough. There are extensive housing needs in Dublin Central. The housing associations are doing tremendous work but imposing this tax on them means certain projects might not go ahead. Clúid Housing Association has striking new plans in Cabra for senior citizens' housing but that might stop and it could affect the budget for maintenance of properties as well.

How can the Government expect people in homes affected by pyrite to pay this tax? Their homes are structurally defective and one cannot get a mortgage to buy a house with pyrite. These people who have already paid stamp duty are expected to pay a property tax as well. I notice that the budget for homeless services will be maintained at 2012 rates. However, the homeless services in Dublin maintain they have increasing demands. They cannot do the same amount of work for more people on the same money as last year.

Deputy Luke 'Ming' Flanagan

I listened to the speech of the Minister for Finance, Deputy Noonan, this morning and I thought it was interesting how he contradicted himself. Someone put it down on paper but no one seems to have spotted that he contradicted himself. He said:

The introduction of a property tax has been a condition of the programme since it was first negotiated in November 2010, under the previous Fianna Fáil Government. It has remained a condition of the programme following subsequent reviews which are agreed by all programme partners.

He did not wait for a couple of pages before contradicting himself. He contradicted himself in the next paragraph. He continued: "It is true that the Government has some scope within the programme to use alternative methods to achieve programme targets." How can it have scope if it has no choice and there is a condition? To say there is scope to use alternative methods suggests it could do something else. The Government has admitted that it could do something different but at the same time maintains it cannot because it would affect people in other ways. The reality is that the Government could bring in different types of taxation. The Minister said that we could increase taxation on the incomes of people who can afford it.

It must have been said here 1,000 times if it was said once that the credit union survey clearly shows that 1.8 million people have less than €100 left at the end of every month after paying their main bills. If the Government imposes this tax on people it will cripple them. Whatever about crippling them, certainly it will damage local businesses because people will not have money to spend on local businesses. Who will be hit? The local authorities will be hit because the businesses will not be able to pay rates.

The most important part of this debate relates to where this money is spent. A hard-up person who has no money left will have to pay money over to a local authority - in my case, one in which the county manager - a nice man, in fact, a gentleman - gets paid more than the Prime Minister of Spain. There are four chief fire officers in County Roscommon, costing us the guts of €450,000. By contrast, there are three chief fire officers in New York City. One might make the case that we are stuck with them, but guess what? We lost one of them in the past year. Guess what we did? We took on another one. Is this where we should be spending our money?

The Minister referred to accountability but he is not ambitious about how accountable the tax will be. He said the measure will provide local authorities with significant responsibility for raising local revenue and that this has the potential to increase the level of oversight. It has the potential but it will not fulfil the potential. I will tell the House exactly what will happen. If the Minister demands in future, even under the new local government system, that the local authorities do not waste money, what will happen to him is what happened to me several times. They will not lift the telephone to him in future. They will not fill the potholes that should be filled. They will blank him and close his local swimming pool for one month in the summer, although it has been there since 1945, and they will boot him around the place. That is not accountability. Whistleblowers should be held aloft in this country and praised, but under this system they get a kicking. No one should put any more money into that system. I believe in local taxation but it must be done right and this is not the right way to do it. The Government has dirtied the name of local taxation forever, which is a crying shame.

Deputy Joan Collins

It has been said already that this is not a property tax. No matter how many times the Minister says otherwise, this is a tax on the family home and it will be known as a tax on the family home forever. That is what people will call it rather than a property tax. It is crazy situation given that there are large numbers of distressed mortgages. Some 1.8 million households are living on €100 per month after bills have been paid. Up to 100,000 families are languishing on the social housing lists. The imposition of a tax of €3 million per year on social housing associations will cause problems. The Government and the local authorities have abdicated any responsibility to provide social housing in the coming period. This tax will impair the ability of local authorities to maintain the services they currently provide or to purchase new homes. Moreover, the housing associations will have to pay a further €90 per house to the Private Residential Tenancies Board. That will put considerable pressure on these groups in the economy.

It is a tax on low and moderate incomes. There is a section in the Bill giving powers to the Minister for Social Protection in order that tax can be deducted from welfare or State old age pensions. This is an amazing achievement by the Labour Party. It is the first time in the history of the State that welfare payments and the old age pension will be subjected to taxation. It beggars belief. It is a tax on jobs. Every euro taken from the pockets of people on low and moderate incomes reduces spending demand in the economy. Austerity is crippling the domestic economy. This measure along with the cuts to child benefit and the increase in PRSI will leave the average family with €1,000 less per year, up to €20 less per week or €80 less per month. A person struggling on €100 per month after bills are paid will be wiped out with this measure.

The Government spin on income tax is a joke. Whether a person's income is reduced by income tax or stealth tax is neither here nor there. One is still hit with the extra tax in one's pocket. This is the same pocket that the Government is dipping its greedy little hands into again and again. What is the Government trying to do to people? Is it really trying to bleed people dry? This is the view of ordinary people.

The Minister has repeated the neoliberal mantra that a tax on high incomes is a tax on jobs but there is no evidence whatsoever to back up this claim. During the height of the post-war boom, a period of high economic growth and relative full employment, there were high taxes and high incomes, especially in the United States. After taking tax advice from the multinationals - there is no trick beneath them to avoid taxes - the Minister said he was concerned that some well-paid executives or bankers might not want to live here. What about the more than 200,000 young, energetic and gifted people who want to live here but who have been forced out of the country because there is no work for them? The attempt to portray the measures as somehow progressive or as some form of wealth tax is an insult to our intelligence. The Government can railroad this through the Dáil but it will be met with mass opposition, as were the measures on septic tanks and the household charge. I will do everything I can to mobilise ordinary people to oppose and defeat this tax and the budget in general. This is nothing more than another attack on ordinary working people on behalf of the rich.

Deputy Seamus Healy

This family home tax is draconian, anti-family double taxation, which represents a blunt and brutal assault on family incomes with no sense of fairness or equity. When in Opposition, the Taoiseach said: "It is morally wrong, unjust and unfair to tax a person's home," with which I agree. However, he has now done a U-turn on this issue.

Families have been hammered by this and the previous Government. They are being forced to pay for a recession the creation of which they had no hand, act or part in, and to pay this tax. These are the same families whose PRSI, child benefit and back-to-school clothing and footwear payments were cut in the recent budget. Many of these families have also had their respite care grants cut. It is not they that will not pay this tax; they cannot pay it.

As stated previously, a recent credit union survey indicated that 1.85 million people in this country have less than €100 per week left after essential bills have been paid; 630,000, or 18% of people, have no money left and 245,000, or 7%, have less than €20 left after paying essential bills, while 42% of people have had to borrow money during the past 12 months to pay bills. These are the families that are being asked to pay this shameful and disgraceful tax. They are the same families who are in mortgage distress and whose homes are in negative equity. They are the same families who paid enormous stamp duty on their homes and who are paying management fees at disgracefully high rates to management companies in this city and in other cities and towns.

There is no link between ability to pay and payment of this tax and no exemption for low-income families. While the Bill provides for deferrals, it is a sham. Also, it is a deferral with a penal rate of interest.

It is proposed that local authority tenants and tenants of voluntary housing agencies will be liable for this tax. As other speakers have said, Respond! and other voluntary housing agencies have confirmed that if they are required to pay this tax they will end up in severe financial difficulties and some may have to close. They will have no choice but to pass on this tax and, in the case of voluntary housing agencies, the €90 per house registration to the tenancies board, to families and to tenants.

There were other choices, many of which have been outlined in this House during the past month and even the past number of years. If the Labour Party had any sense of decency or commitment to the founders of its party it would have this Bill withdrawn immediately.

Deputy Mattie McGrath

I, too, welcome the opportunity to speak on this Bill. From where do the mandarins in the Department of Finance, who came up with the figure of €500 million, expect this money to come? It is not possible to get blood from a stone. The Government is being awfully generous in the exemption under section 7 from this tax in respect of accommodation provided to persons who by reason of old age, physical or mental disability or other cause require special accommodation and support. It should take a bow. Those in Government are wonderful people. That their generosity knows no bounds is demonstrated by the fact that they have opted not to throw such people into pauperism and back into the soup kitchens and poor houses. Cromwell once said, "To hell or to Connacht." We now have the Taoiseach, Deputy Kenny, and the Tánaiste, Deputy Gilmore, saying "To hell or back to the homeless agencies or the soup kitchens". This Government will drive people into penury. There will be no place for members of the Government to hide. They, too, have to return to their constituencies and meet the people. When in Opposition, the Taoiseach said it was morally unjust to tax a person's home. What has gotten into him, and in such a short time? The Taoiseach has been a Member of this House for an awful lot longer than I have but he seems to have lost all connection with the ordinary people whom he, like the rest of us, was elected to represent. It is not too long ago the Taoiseach was on this side of the House telling those in Government what they were doing wrong.

Deputy Catherine Byrne

Including Deputy Mattie McGrath.

Deputy Mattie McGrath

Yes. I accept that. I too made mistakes, but if one does not make mistakes one learns nothing. However, when on the opposite side of the House the Taoiseach thought he knew it all. We also had the gospel according to Saint Eamon then. Every day, the high priest, Deputy Gilmore, would preach from the high altar. According to him, it was Labour's way and not Frankfurt's way. He also told us that hellfire would not be hot enough to burn the bondholders.

The introduction of this tax is outrageous. I am the chairman of a voluntary housing association. Low-income families in non-profit housing have been singled out to pay the local property tax. This tax on social housing will have long-term consequences for the ability of non-profit housing associations to continue to provide housing to the most vulnerable. At a recent meeting of the board of which I am chairman I was told by the volunteers, all of whom who are older than I am and have worked hard to provide people with homes, that they were going to walk away. Why would volunteers do this while the mandarins and elected representatives are enforcing penury on people? There are many flood-damaged houses in Clonmel and others which are affected by pyrite. The owners of these houses, who cannot obtain insurance cover on them, are being asked to pay this property tax on top of the stamp duty they have paid and the service charges they continue to pay.

Members of the Government need to have a chat with their constituents and then among themselves, and then come back in here next week and take this tax off the shoulders of the people, because it is one tax too many. I hate using the word "hunchbacks" - it is a horrible term - but the Government has driven the people into penury and into the ground. Next Monday, there will be an estimates meeting in my local county council. As a result of its failed attempts to collect rates, it is obliged to consider reducing them. We now have another arm of government voting in more charges. This is the asylum, being run by the lunatics. Have respect for ordinary people, please.

Deputies

Hear, hear.

Acting Chairman (Deputy Seán Kenny)

The next speaker is Deputy Olivia Mitchell, who I understand is sharing time with Deputies Mary Mitchell O'Connor, Seán Kyne and Catherine Byrne.

Deputy Olivia Mitchell

If there were no troika, I would still support the principle of a property tax. I believe there should be a firm and direct link between the service and the payment. We would all get better services if this were the case. I believe that had a property tax been introduced ten years ago we would never have had the property bubble and we might now be better able to afford to pay this tax. We need a stable tax source which does not fluctuate widely with the economic cycle and is not a disincentive to work. I also believe that we should not continue to put the burden of the provision of local services on the business community, as we have been increasingly doing for years.

I mention the above points to emphasise that in terms of what I have to say about this property tax I am coming from the perspective of someone who is supportive of the principle. This tax is a gross injustice to the people of Dublin and, to a lesser extent, people in other urban areas. It is an injustice because the method of calculation is based solely on the value of the property, with no reference to the cost of supply of local services. It is not a local service tax, nor is it a regional tax; it is a national property tax placing a single rate on all properties across the full spectrum of property values throughout the country from Dublin to Kerry and up to Donegal. Inevitably, such a valuation system opens a huge gap between the amount to be paid by those who own a large house and those who do not. However, this is not the gap to which I am objecting. I object to the gap between the amount to be paid on two precisely similar houses in different parts of the country, with, of course, the higher sum being paid by Dublin home owners. I do not object to a person in Dublin with a big house paying more than a person in Dublin who owns a smaller house. That is reasonable. I do, however, vehemently object to the owner of the small house in Dublin having to carry a multiple of the liability of the owner of a larger house elsewhere, whether it is in Leitrim, Donegal or anywhere else. The valuation method that has been chosen has nothing to do with the cost of local services. People have said to me that those in Dublin have better services than those in rural Ireland. Maybe we do; I do not know. If it is true, we will pay for them. We need only to be told what they are and, together with the business community, we will pay rates and reasonable property tax. That is not what this Bill proposes. It does not propose that we pay only for costs in Dublin but that we also pay towards the cost of services for everybody else. This is because people living outside Dublin in rural Ireland are lucky enough to be able to purchase their homes at a much more favourable, lower price.

To give an example of the injustice of this and the impact of using this method of calculation, the cost per capita of providing services in my local authority area of Dún Laoghaire-Rathdown is exactly the same as the per capita cost of providing services in Donegal but the homeowner in my area will pay somewhere in the order of five times the property tax that the homeowner in Donegal will pay. This is quite simply unconscionable and people will not accept it. I fully understand that there must be a redistribution element to taxes from areas of high economic activity to areas of low economic activity and that is what we use income tax for; it should not be what we use a local property tax for.

After years of austerity a new property tax is inevitably going to be hugely unpopular and difficult but if it is not at least fair it will be more than just unpopular and difficult; it will be completely unacceptable and impossible to sustain over any length of time. This tax is being sold to us as a local tax which will go back into the council area in which it is collected. When Dubliners realise that this is not in fact the case, we will be lucky to avoid a revolution and I do not blame people for revolting if that is the case. The tax will go into a single pot, the local government fund, to be divided out according to some arcane formula that has absolutely nothing to do with the amount of money collected in an area or the cost of services provided there.

To put it crudely, lest there be any misunderstanding, Dubliners have to pay too much so that others can pay too little. That is the bottom line and that is why this tax will not fly in Dublin. There are many injustices in this. First, we pay more than those elsewhere; second, we pay more in order to subsidise other councils' services; and third, no allowance is made for those who paid the biggest stamp duty during the Celtic tiger years, that is, those who live in Dublin and other urban centres. From every perspective, this is an anti-urban tax and I cannot see why it cannot be calculated on a council by council basis, or even on a regional basis, just as is done for commercial rates, whereby the councils decide what they need to collect in an area and then strike a rate that will give them that amount, with larger homes subject to a higher rate than smaller homes. That is the way it is done in every other country that has a local charges system. I could even accept, given our current budgetary requirements and the need to raise €500 million, that we might have to pay a little bit more than the cost of local services, particularly in the early years of the tax. However, the underlying means of calculating the tax must be fair.

As a member of a Government party, despite what I am saying, I am going to support this Bill because I believe I have a better chance of changing it on this side of the House. I also realise that the budgetary arithmetic is done for this year and it is now too late to alter it. In any event, I doubt I would be able to come up with cuts and taxes to the tune of €500 million. However, I am asking the Minister to take what I have said on board and to adjust the means of calculation for next year because a tax that is so fundamentally unfair will produce such a backlash and cause such social unrest in Dublin that it will imperil all of the efforts of the Minister and the measures he has put in place to try to get our public finances back in order. I also believe this tax has the potential to undermine and devalue all of the sacrifices that the people have made over the last five years.

There have been some suggestions that councils will be allowed to retain 65% of what is collected in their area but there is nothing in the legislation about that so I do not know if it will happen. The legislation does contain a provision that each local authority can vary the tax by 15% and this merely bears out my point. It is only in urban areas of high-priced houses that 65% of what is collected will actually cover the council's costs and give the prospect of later reducing the charge by 15%. To me, this indicates that, at least initially, the property tax overpayment in Dublin will be in the order of 50%, with 35% going to rural councils and then, apparently, we will be so cash-rich that we will be able to give a discount of 15%. It is simply inequitable to ask people to overpay by 50%. I urge the Minister to listen to me in this regard. This is an issue which will not go away and we cannot hope that people will forget about it. They will not forget about it and it will not go away; neither will I.

Deputy Mary Mitchell O'Connor

Shakespeare wrote "Something is rotten in the State of Denmark" and during the Celtic tiger years there was something very rotten in the State of Ireland. However, this Government is trying to regain control. It is trying to dole out the appropriate medicine and as any patient will tell you, medicine can taste bitter. However, the medicine is working and we are closing the gap on borrowing. We are gaining control over our public finances and beginning to see the light at the end of the tunnel.

A local property tax should have been introduced during the boom but past Governments did not have the courage to do so. As a Deputy for the Dún Laoghaire constituency, I probably represent one of the highest concentrations of very expensive homes in the country. Many of the residents in these houses have the appearance of being asset rich but many are cash poor. I am aware of residents who purchased four bedroom semi-detached houses in the boom for between €1 million and €1.6 million in my constituency. These are not mansions or trophy homes. Indeed, many of these houses are equal to or smaller than semi-detached homes outside the Dublin area. I am also aware of three bedroom semi-detached houses which were sold in my constituency for €650,000 and terraced homes sold for €450,000. The families who purchased these homes are not millionaires. They are struggling, middle-class people. While I agree that a tax must be progressive and in terms of property tax policy measures, the local property tax proposed by Government is best international practice, I also believe that it is very harsh on the people in my constituency who bought modest homes but had to pay trophy home prices. A bigger house is not always indicative of a greater ability to pay. Just because one has a big house does not mean one is less prone to losing one's job, to getting sick or to tragedy. Many are in negative equity or are in mortgage arrears. This proposed tax takes account of people's ability to pay through a series of deferral arrangements but it does not take account of those who paid stamp duty of up to 9% at the top end of the market. Many of those buyers had to borrow the money to pay that stamp duty.

I acknowledge that the proposed system is, without doubt, a more employment-friendly alternative to increases in income tax or other taxes on labour which would stymie job creation. Any action taken by the Government to reduce our spending needs must be employment-proofed and this was the case in budget 2013. However, the Dún Laoghaire constituency is more than paying its way and its constituents had the highest compliance with the household charge, at 85%, while other areas only managed 55% compliance. It is only right that central Government would reward Dún Laoighaire-Rathdown County Council with its just and rightful local authority funding. As an elected representative for Dún Laoghaire, I will support this Bill but I will also lobby the Minister to ensure that Dún Laoghaire gets its fair share of central Government funding. Counties that have not paid their fair share should not get the same rewards. Those who paid the lion's share should be rewarded accordingly. Like an antibiotic, this tax may leave us a bit nauseous in Dún Laoghaire but we want a fair share of the moneys raised to be invested back into our amenities and facilities. It would be galling if other counties did not pay and expected Dún Laoghaire residents to subsidise them.

Deputy Seán Kyne

It is safe to say that most countries have some form of local property tax or charge and it is an internationally accepted way of funding local service provision. A local property tax is a steady source of income for local authorities. As former members of local authorities, I and many Deputies know that we had very little power in terms of raising local revenue.

Other than setting commercial rates and, in recent years, water charges for farmers and businesses, we relied on the local government fund and grants. Motor taxes went to the Central Fund. The report of the commission on taxation recommended that at least 86% of total expenditure at local level should be raised locally. It is accepted that it was a mistake to increase income tax in the 1980s because it became a tax on jobs and investment. A local tax, as long as it is progressive and ensures those with the most expensive properties pay most, is the fairest system.

The context for this debate is the EU-IMF programme, which includes the introduction of a property tax. It is a requirement of the programme that we widen our tax collection sources. Furthermore, we are overspending as a country and the gap between revenue and expenditure has to be narrowed, with €1.5 billion more required per month. We have to look for alternative methods of raising money. Fianna Fáil negotiated and accepted the property tax as part of the troika deal.

Deputy Éamon Ó Cuív

That is incorrect.

Deputy Seán Kyne

That debate is well known.

Deputy Alex White

Get the document.

Deputy Éamon Ó Cuív

I have the document.

Deputy Seán Kyne

We have debated this issue in the constituency which Deputy Ó Cuív and I share. Last year Fianna Fáil opposed the flat rate household tax but now it wants to keep that tax and oppose this more progressive tax. There is a slight contradiction in that approach.

Sinn Féin's policies in the North differ from its approach in the South. In a partitionist policy, it supported increases of 10% to household rates between 2011 and 2014, with charges amounting to more than £1,000 at present.

It is right and proper that the Revenue Commissioners be charged with collecting this tax. While it is important to debate the principles of the tax, once any new tax is levied, it is important that democratically elected Members uphold the law of the land. When the household charge was introduced, Deputies refused to pay it and encouraged others to do likewise. Revenue has the power to collect this tax because it is, after all, the State's tax collection body.

While I have sympathy for Deputies Mitchell and Mitchell O'Connor, local property prices reflect the area in which one lives and the services available locally. For example, in urban areas there are footpaths, lighting and access to publicly funded municipal sewerage schemes. These are not necessarily available in rural areas. People in rural areas have also paid stamp duty and taxes on the construction or purchase of their houses. They may not have paid as much but they do not get as much in return. For this reason, I agree with the proposal to allow local authorities to set the local property rate after 2016. Authorities in which expensive properties are located will probably be able to reduce local tax rates by 15% or more as we move towards a less centralised system.

Everything must be paid for either by direct taxation or through local charges. The Putting People First document on local government reform is worth reading in this regard. With greater local collection of charges it will be more necessary to monitor local government and budgets. The people who elect their councillors will have the power of scrutiny and through this and other checks and balances they will be able know what their local authorities are doing in return for the money they receive.

Deputy Catherine Byrne

The local property tax is important for supporting this economy and allowing our country to emerge from the current recession. The previous Government took the easy option of hiding the property tax under the carpet. It did not have the courage to introduce the tax because it knew it would be crippled in election. The people saw what happened in the dark, however, and they made the decision to put the country in the hands of a Government which is willing to make the hard decisions to turn the country around.

The system of levying tax according to the value of a property is a fairer and easier way of collecting local taxes. This is the norm in other parts of the world, including in Northern Ireland and Great Britain, where people pay property taxes in return for services. The payment arrangements are fair and there will be a choice of payment by instalments, from pensions or through social welfare. It is preferable to operate a system in which people can contribute by instalments rather than require them to make a one-off payment.

It is also fair that, in respect of the household charge, the Revenue Commissioners will have the opportunity to bring some of that money back into the country's coffers. People who paid it in the past were annoyed that many others did not get to pay it. Deputy Mattie McGrath told us to speak to our constituents. I speak to my constituents all the time. I am not asleep on this issue. People believe it is their duty to the State to pay taxes. They do not want anything for nothing and they certainly do not want a handout.

The Deputies opposite who encourage people not to pay this tax should remember they are the beneficiaries of State expenditure. Election to this House brings responsibilities and requires courage. Several years ago the campaign of opposition to council waste charges created chaos in our communities, brought on the privatisation of waste collection and left people with huge outstanding bills. Deputy Joan Collins stated that she would stand with the people. She did not stand with them when they could not pay the arrears on their bills. They came to my office to ask me to intervene with the local authority to relieve them of their arrears. If she is going to stand with the people this time, she will have a huge bill on her hands once she finishes. It is hypocritical that Members refuse to acknowledge the bigger picture of the future for our children and grandchildren. It is time Deputies stopped sending negative messages to communities in which people are willing to pay charges. At every public meeting it is the same round-up of cowboys and indians.

Deputy Éamon Ó Cuív

I welcome the opportunity to tease out the principles and options we face in respect of this issue. Deputy Kyne stated that the proposed tax will provide a stable form of revenue. I am sure Deputy Mathews, who is a good man with figures, will agree that if we had levied property taxes based on market prices at the height of the boom the revenue derived from it would be two to three times greater than the amount that could be taken this or next year. Property prices have, of course, collapsed. The idea that the tax as formulated by the Government is somehow more immune to the variations of the economy than any other tax is rubbish. As currently proposed, it will be totally cyclical and as the market for houses improves, the revenue from it will increase, but if the market collapses in the future, it will collapse.

The collapse in revenue on the capital tax was relatively small. If that was all that we had lost we would not have a problem. The collapse in the big three of PAYE, PRSI and VAT receipts caused the wider crisis in the public finances. Other taxes in which there was a percentage collapse may be more easily identified as connected to the collapse but the loss of income to the State was from the big three.

This tax will be equally cyclical. Therefore, there is no benefit in having the wider basket of taxes if what the Minister is trying to do is create stable sources of income. The difference between this tax and rates is that the rates tax was largely immune to the cycle because it was purely the choice of those setting it.

Deputy Seán Kyne

Fianna Fáil got rid of rates.

Deputy Éamon Ó Cuív

With great support from Fine Gael. It was the prerogative of those involved to fix the rate. Therefore, there was no automatic collapse as property prices collapsed.

I hate it when some people accept the perceived wisdom without analysing it. The perceived wisdom is that because every other country has something, we must have it too. Who says every other country is right? Who says taxing family homes is a good way to go? To be honest, if the Government had stated it was going to exempt family homes but was going to place a levy on all fire and theft insurance policies on personal property over a certain value - Rembrandt paintings, jewellery and yachts - I would have said that was a fair idea because these are not necessities of life but luxuries. However, what it is doing is taxing the family home and in doing so it is hitting families.

One of the things that has made Ireland a very stable society has been the high rate of ownership of the family home. I have argued with local authorities and my colleagues when in government about this issue. Recent policies brought forward by officials in the Department of Finance and accepted by some politicians have consistently tried to undermine this aspect. I accept that local authority policy makes provision for the RAS and other such arrangements for those who do not have children. However, I do not accept that type of policy in the social housing sector for people with children because too often in my career as a politician I have seen the upset caused when people are moved from place to place and from house to house and when children must change schools and so on. We all know the more stability families have, the better it is for society. I do not agree with the elimination of the assistance we have been providing for first-time buyers of houses, particularly where children are involved. We must face up to the fact that with regard to the stability quotient, it makes a significant difference when children are involved. I have always been opposed to forced or induced apartment living where children are involved. If we seek outcomes for society to give our children a chance, these issues are important. However, what has the Government done? It is totally anti-children. Let us recall, for example, three areas that it has hit. It has hit struggling families straight between the eyes in the budget. In the case of child benefit, the bigger the family, the bigger the hit. I always remember the total lack of understanding on the part of the Minister for Finance, Deputy Michael Noonan, when he asked me, when I was Minister for Social Protection, what I had got against the third child in a family. The reason he asked that question was that I was not willing to do what the Government has done, that is, hit the third and successive children with a double decrease in one year. His comment to me in 2010 showed that he did not understand the system of child benefit. Therefore, the policy now is to hit children and the more children there are in a family, the harder they are hit.

The Government is hitting the same families with the property tax and and the changes to PRSI. This is a double hit when two parents are involved in rearing a family. This is the wrong way to go. Philosophically, we should be making houses affordable. However, we are imposing a property tax at a time when, as Deputies on the Government side have rightly pointed out, people who bought houses during the property boom paid large sums in stamp duty.

I wonder how much this will add to the bank bailout costs. There are 168,000 mortgages in arrears, or one in five. Now the Government is looking for the people affected to pay another €300 or €400. If they cannot pay their mortgages, they cannot pay this tax. What choices are they meant to make? They must choose between Revenue or the bank coming after them. There is the old saying that one cannot squeeze blood out of a turnip. Therefore, something will have to give. If the people concerned do not pay their mortgages, the banks will get into even deeper trouble and be able to lend even less money to productive enterprises and the Government will have to provide the money. If the people concerned do not pay the tax, the Government's arithmetic will come apart and Revenue will have to prosecute them.

A surprise element of the proposal was not made clear on budget day, that is, that local authorities must pay the tax on all rented local authority houses, with a few exceptions. Local authorities tell us that they do not have the money and that the only way they will be able to raise it is by upping differential rents. Anyone in a local authority knows that differential rents are already pitched at what is considered to be the highest amount that can reasonably be charged for a house for a family. Are local authorities to increase differential rents, or must the deficit of city and county councils increase? Sooner or later that chicken must come home to roost.

I accept this is probably not the best time to be introducing a property tax. That it is based on market value means it will clearly be slightly unfair to people in urban areas, particularly Dublin but also Cork, Galway, Limerick and places like that. It is regrettable that those in cities are subventing those in rural areas again, primarily because house values are lower where demand is lower. I understand that we are in a difficult set of economic circumstances. I understand completely that the figures for this year and the next few years are done. I did not hear what my colleague, Deputy Mitchell, may have said earlier. It was given to me second hand. I will support the Government on this initiative. I hope we can actively review it in the future, having analysed the figures to see precisely where the income is coming from, and try to allocate it more appropriately or more fairly.

I do not wish to attack Sinn Féin's position on the property tax. Some of its Deputies spoke earlier about being hamstrung by Westminster and all the rest of it. The fact remains that the average property tax payment north of the Border is approximately €1,000, whereas the average payment south of the Border will be approximately €400. Yet again Sinn Féin is taking a different approach to politics south of the Border compared to north of the Border. I often find that quite ironic.

Fianna Fáil now claims it is the wrong time to introduce a property tax even though it committed the State to its introduction and the raising of €530 million before the end of next year. No doubt this is a duality of position for party political and personal gain on the part of the individual Members who continue to spout that line.

I regret that so little time is being allocated to this debate.

Deputy Peter Mathews

Three hundred minutes.

Deputy Alan Farrell

I do not understand why we are rushing through this debate to get the Bill passed before Christmas. The reckoning date is May and it is not being introduced until July. I find it very odd that we are rushing through another Bill.

Deputy Peter Mathews

There is 1 minute and 38 seconds per Deputy.

Deputy Alan Farrell

The charitable housing bodies have made a cogent argument. I am sure all Deputies have received and read the e-mails. I am not sure why we are taking money from local government to give to local government, which seems pointless. The income limits for exemptions, at €15,000 for an individual and €25,000 for a couple, are clearly too low. What about the couple living next door to me who have a €300,000 mortgage and a household income of €31,000? I have seen the payslips; they pay €1,700 a month for their mortgage and are in arrears. What about the countless other families? We are simply adding a debt burden to those individuals. The income limits should be reviewed.

I welcome the Minister's proposed exemption for those in pyrite-affected estates. He alluded to this earlier when he said it would be referred to in the finance Bill. I welcome that because approximately 12,500 people living in estates such as mine in north County Dublin and dozens of others across the State are affected. These estates will be examined and the detail will be most important.

During the debate some people have mentioned that those in negative equity are somehow being unfairly treated in the introduction of a property tax. Negative equity is irrelevant in terms of the ability of a person to pay. For those not selling their houses, negative equity is not an issue. They pay their mortgage and other bills as they normally would. The only time it will affect people is when they go to sell. Obviously, there are many choices to be made by people such as me, and doubtless countless others in this House and across the State, who are in negative equity.

I again register my annoyance at the completely insufficient time allocated to debate the Bill.

Deputy Luke 'Ming' Flanagan

Hear, hear.

Deputy Tom Hayes

I am glad to have the opportunity to speak on the Bill. Many of us have concerns about the introduction of a tax such as this. Any extra tax that is introduced is bound to be unpopular, but the reality is that we have no other choice. I am disappointed that Deputy Ó Cuív walked out because he was a member of the Government that signed up to this. I understand new Fianna Fáil has to go about new ways of doing things. Shame on the old jokers who were in the previous Government who signed up to this and who now come in and change their story. The reality is-----

Deputy Seán Ó Fearghaíl

The remarks being made by Deputy Hayes-----

Deputy Robert Dowds

Are totally apt.

Deputy Seán Ó Fearghaíl

-----are so profound that they should be heard by some of his colleagues. Therefore, I call a quorum.

Deputy Paschal Donohoe

Is it any coincidence that Ireland is one of the few countries in the world that does not have a non-transaction-based property tax and is also a country with one of the biggest banking collapses, one of the biggest housing collapses and one of the biggest general government budget collapses in history? Not having such a tax in place or a broad enough tax base partly explains why these three traumas fell upon our country.

Many in the Opposition have said this tax will have an impact on family homes and on families who are already under terrible strain and difficulty. The Government has an obligation to provide public services to the same families. The Government must also provide for social welfare payments, schools, hospitals, teachers and nurses to the benefit of those families. It also provides money to ensure their local authorities are working properly. The Government continues to face an enormous gap between what we take in in taxes and what we spend. Until we get to the point at which the level of public services we want is paid for by the level of taxes we can bring in, those same families will continue to be under pressure, vulnerable and concerned for their future. That is why the principles underlying our tax system are so important and must be well thought out.

I welcome several aspects of the proposed property tax, but I also have some concerns and observations that I would like addressed. As far as positives go, I welcome the role of the Revenue Commissioners in the collection of the charge. One of the main problems with the implementation of the household tax was that not enough people understood how they could furnish their payments and, moreover, the options for doing so were very limited. It was much easier for people to purchase refuse bags or top-up telephone credit in their local shop than to pay that tax to the State. Second, I welcome the progressive element of the new tax whereby houses valued at more than €1 million will be liable for a higher rate of payment. That is an essential element in any progressive tax system. In that regard, I also welcome the cancellation of the household charge. A flat-rate tax which bears no relation to the value of the asset being taxed is not ideal. Finally, I welcome the inclusion of a deferral system for families whose income circumstances are particularly tough.

On the other side of the coin, I have several concerns regarding the provisions of the Bill. Before setting them out briefly, I am anxious to move away from the notion which some of my colleagues have raised that the tax will mean that urban areas could be subsidising non-urban areas or particular areas in Dublin subsidising other areas in the same county. That is a dangerous path to go down. We already have a situation where the energy produced in one part of Ireland is consumed by another part of the country. Likewise, tax receipts from agriculture, for example, are spent in urban areas. I am wary of pursuing a line which seeks to split people into different categories based on the area or county in which they live.

My first concern regarding the proposed tax is that it will inevitably cause difficulty for people who purchased their homes at a very high price. In this context, I would like to see the date after which a local variation can be introduced brought forward from 2016 to give a greater recognition of the different circumstances throughout the country. Second, more should be done to ensure that funding streams to local authorities are protected. Third, it is important that income thresholds are reviewed. As our economic situation improves and tax revenues continue to grow, this is an area which should be prioritised when it comes to dispersing those dividends. Just as the collapse of the housing sector was one of the causes of the great difficulties we are now facing, we must ensure the implementation of the property tax does not add to the difficulty.

Deputy Pat Breen

I welcome the opportunity to contribute to the debate on this Bill. The introduction of any tax is never popular, but particularly so in the midst of the greatest recession since the foundation of the State. Property taxation is the norm throughout the world and the proposed rate of 0.18% compares favourably with the rate in other countries. I note that while Sinn Féin is opposed to the introduction of a property tax in this State, it, as a party of Government in the North, does not seem to have any difficulty with a much higher charge being levied in that jurisdiction. A householder in the North whose home is worth €200,000, for instance, is expected to pay in the region of £1,500 annually in property tax. In this State, on the other hand, the owner of a property of the same value will pay only €202 next year and €405 in a full year. The Government's success in keeping the charge to a minimum is very welcome. Furthermore, the Minister's undertaking not to increase it over the lifetime of the Government offers certainty to householders. This week's edition of The Economist, a very reputable publication, refers to the "modest" property tax being introduced by the Irish Government against the background of a collapse in property prices.

I recently met with a group of business people in Shannon whose concerns related mainly to local authority rates, which are a significant problem for businesses in every town and county in the country. These particular business owners, from Shannon, Ennis and Kilrush, had their premises valued at the height of the boom and the rates assessed on that basis. Despite the downturn and the reduction in property prices, they are still expected to pay the same rates. The inclusion in the Valuation (Amendment) Bill 2012 of a facility for the revaluation of business premises is particularly welcome in this context. I look forward to discussing the issue when the legislation comes back before the House.

As we know, the household charge was an interim measure. From the dealings I had with constituents last year, I would agree with my colleague, Deputy Paschal Donohoe, that the problem was not so much that people were unwilling to pay the charge, but that the methods of payment were not very accommodating. In some circumstances, in fact, people found it impossible to furnish their payment. As such, I welcome the proposal that the Revenue Commissioners will conclude a service agreement with An Post whereby people can pay the property tax at their local post office. This will assist home owners in rural areas, especially the elderly, with the added benefit of enhancing the viability of community post offices.

In line with a similar provision under the household charge, section 7 includes an exemption from the new property tax for charities. Will the Minister clarify whether this includes the residences of priests? Specifically, I have been contacted by the diocese of Killaloe regarding the residences in its area which are registered in the ownership of St. Flannan's (Killaloe) Diocesan Trust, a registered charity. The concern is that the wording of the section seems to suggest that the exemption is conditional on a property being provided for special needs accommodation, which does not match the exemption criteria for the household charge. Ultimately, the charge in this case will be borne by taxpayers on behalf of the parish, so it is an issue the Minister should clarify.

Deputy Dessie Ellis

I propose to share time with Deputy Mary Lou McDonald.

An Leas-Cheann Comhairle

That is agreed.

Deputy Dessie Ellis

The proposed tax on family homes is not only an attack on those who own their own homes but also on those who rent local authority housing. It is a regressive tax which does not take into account the dire financial circumstances in which so many now find themselves, including the tens of thousands of families in negative equity. It is also an attack on the civil rights of citizens, who will be forced to pay the charge out of their wages or social welfare payment. We are told that the Government has to make tough decisions. Ordinary people are making tough decisions every day, such as whether to put bread on the table or withhold their rent, mortgage, electricity, gas or telephone bills. People are forgoing essentials to make ends meet and eke out an existence. That is how serious living has become in this country. The Government, however, is targeting the least well-off, including women, children, carers and people on low and middle incomes.

I commend Deputy Colm Keaveney and others in the Labour Party on their recognition that enough is enough and the threshold of decency has been passed. We have a serious housing problem in this State. It is a crisis that has been raging for several years, precipitated by the abject failure of every Government since the foundation of the State to deal with the shortage of social housing.

The current demand, more than double the lowest levels ever recorded in the State, is approximately 100,000 applicants on the housing waiting list, with an additional 100,000 on RAS and rental supplement, which I do not consider to be housed.

Local authorities, housing bodies and co-operatives house many thousands of people in every county, borough and city. They provide that most basic of things, a roof to lie under and a place to call home. A state which fails so many in this regard is not one of which to be proud. Funding for social housing has been cut repeatedly in recent years following decades of the running down of public housing and the long-running attempt to relinquish the State of the responsibility for social housing provision. The buck has been passed on to the housing bodies which cannot meet the demand and are being cut by the Government. The private rental market has also been enlisted, being subsidised by more than €600 million every year, as more than 100,000 families are on rental subsidy and RAS. It is a shame that we have gone down that road.

Last week, the Government cut a further €46 million from the local authority housing budget, down to €65 million from €189 million in 2011. Regeneration projects, in Cork, Dublin and Limerick in particular, have been cut by €34 million. Funding for Traveller accommodation has been virtually abolished. That is unsurprising given who is Minister for the Environment, Community and Local Government. Traveller sites and homes are to be liable for the tax. Housing is not a priority for this Government. The thousands in substandard, overcrowded, unaffordable accommodation crying out for a decent place to live - the cut after cut to housing and the increase in the number of those sleeping rough and shelters bursting at the seams are all testament to that. Now we have the home tax, which is the nail in the coffin for anyone who was naive enough to believe the Government gave a fiddler's for housing. If the Government rejects the Sinn Féin amendments, the new tax will be levied on the houses provided by local authorities and housing bodies. That will add approximately €5 to €7 a week on each council property. It is an absolute scandal. For local authorities across the State, that means a bill of approximately €25 million. According to Respond! Housing Association it will cost it up to €400,000 and cost the voluntary sector €3 million as a whole. Most likely, those figures do not take into account the loss of work hours calculating the levy on these bodies for the audacity of doing a job the State has failed or shirked.

Local authorities are supposedly to benefit from the home tax. What a lot of nonsense. What benefit will councils realise as they fork out for every home they have provided? The only conclusion is that this money will be taken from services the council provides. In Dublin, we have a crisis not just in provision but also in the upkeep of social housing. How much will the council cut from maintenance to pay its bill for the home tax? Will tenants be forced to pay higher rents? Will local authorities have to front-load the tax? Given that some tenants are already struggling and many are in arrears, one could ask how we will get money from such people.

I urge the Government to support the amendments my party has submitted. The amendments would exclude social housing from liability. It is unacceptable to force any person or family on social welfare to pay out of their payment. We would also exclude pyrite-affected homes. Families who live in homes which have serious structural problems or are threatened by them should not have to pay the tax. Such people were failed by the State which did not properly regulate to weed out materials contaminated with impurities like pyrite and there must be recognition of that. I welcome the exclusion of unfinished estates but I ask that the owners of homes in problem buildings or estates such as Priory Hall, The Laurels, Gleann Riada, Aileach Valley and Balgaddy would also be included. To do anything else would be to act irrationally and callously. We have had too much of that from the Government already.

Many of my former Labour colleagues on the council have decided to abandon the tenants for whom we all fought in the council chamber. We fought to keep rents down and to help such tenants by seeking increased funding for maintenance. Members have let tenants down. They have forgotten where they came from. There are alternatives. We have shown what they are. One such possibility is a wealth tax. It is being used more and more in Europe. Even the opposition in Germany has proposed a wealth tax. Let us look at possible alternatives and listen to proposals made by others. People have rights and it is a breach of civil rights to go after people's money. It is an outrage that we have come to this stage. There may be legislative reasons that this measure should not be allowed. It is outrageous. I call on Members to vote against the Bill, which will impose significant penalties on families, far more than people realise. In January or February, people will be beating down our doors on all the other budget cuts. This tax will elicit the same response when people see what is involved. I urge Members to vote against the Bill.

Deputy Mary Lou McDonald

How much time do I have?

An Leas-Cheann Comhairle

Twelve minutes.

Deputy Peter Mathews

Deputy McDonald is lucky.

Deputy Mary Lou McDonald

Indeed. It is difficult to know where to begin. This is an unfair and unjust proposal, which comes hot on the heels of social welfare cuts rushed through the Dáil yesterday. We are all acquainted with those. I hope we are all equally acquainted with the consequences that the cuts will have on people's domestic budgets, on their standard of living and decisions they will make on whether they can pay their energy bills, pay rent or buy a new pair of shoes or a coat for a child.

I am conscious sometimes that when I raise such issues they might be considered a little mundane for a Chamber as auspicious as this one. It is worthwhile for all of us to remember that in the final analysis, when all the political rhetoric has been done and dusted and people have dug themselves into whichever political trench is appropriate, we all go home and we go back into the real world. The communities I represent are no different from those of many other Members. In the real world, people are struggling. That is not just rhetoric; that is the truth.

One could ask why the property tax is wrong and irrational. It is because people cannot pay it. Sin é. I will go into more detail in my finessed political arguments but the bottom line is that people do not have the money, end of story. In theory, the Minister for Finance, Deputy Noonan, might think it a noble thing to introduce this new form of taxation. He might make arguments about broadening the tax base and point to other jurisdictions. That is alright, but he must come back to the inescapable reality that people are not able to pay it. It is not just those people to whom my colleague, Deputy Ellis, referred, tenants of local authority flats or houses. They undoubtedly will endure a hike in their rent, or a further reduction in maintenance services. That will be a significant problem for them. However, there is a whole other category of person who bought a home of their own that is now struggling with negative equity but, more to the point, with mortgages they simply cannot pay anymore. The Central Bank figures that emerged this week inform us that one in four home owners are now unable to maintain their original mortgage contract. That is where it is at. We have come through the trauma of a property bubble that was inflated over the years, disgracefully and irresponsibly, by Fianna Fáil-led Governments. The bubble burst and we are left with the wreckage of it.

There are families throughout this country, in urban and rural areas and across the classes, which, by virtue of having bought family homes, are trapped in a real nightmare of debt and of trying to muddle through, perhaps on an interest-only or other restructured arrangement. There is a need for a reality check. It must be stated repeatedly that this tax is wrong and also that it is crazy and irrational, especially as those whom the Government wants to pay it cannot do so.

This is not a measure which broadens the tax base. If the Government was truly broadening the tax base, it would be seeking to open up a new revenue stream from new sources. Of course, that is not what the measure before the House will do. Under this measure, the Government will return to the same families which find themselves in very difficult circumstances, put its hand in their pockets and say "We want some more". It is picking the pockets of the very people who carry the burden of taxes and charges and who are expected to adapt to the various cutbacks. I query any argument to the effect that this measure involves a broadening of the tax base. I just do not believe that such an argument stands up to scrutiny.

Deputy Donohoe referred to progressivity and to the mansion tax. If the latter is the token gesture towards progressivity, well then God help us all. The mansion tax issue entered the equation simply because the Labour Party unfortunately lost the argument in respect of the imposition of higher levels of income tax on those who earn in excess of €100,000. I presume the Minister, Deputy Noonan, was chief among those who resisted this very reasonable and fair proposition. It is not progressive to hammer people for more tax on their family homes when, as policymakers, those in government are aware that the individuals I referred to are struggling just to meet their weekly bills. There is nothing progressive in that.

It is interesting to note that very few waivers will be on offer. The deferral for which provision is made is almost like a stay of execution for people. It is as if the Government were saying: "We want your money, which you cannot give us now. However, we will lie in wait for it up to and including your death and the disposal of your property. We will come and get our cash then." This is an astonishingly callous approach. The fact that those in government could not even find the wherewithal to provide a comprehensive schedule of waivers speaks to the fact that they are deluded.

The Government had choices. The Labour Party knows that there are such choices but that when reference was made to them, a deaf ear was turned. I very much regret that. Let us not pretend that choices do not exist. The Government could choose to tax wealth, for example. That would be a fair choice, particularly in the current climate. Notwithstanding the economic collapse, we know there is still considerable wealth. The Central Bank's quarterly accounts for Ireland released in August show that net household wealth in this country in the first part of this year was in the region of €447 billion. Even taking account of the fact that wealth has been undermined, degraded and reduced year on year and that the figure might be slightly lower as 2013 approaches, there is no doubt there are substantial holdings of wealth.

If the Government is serious about broadening the tax base and creating new revenue streams and if it has the cop-on to understand that in raising revenue, one should not take actions which further damage the domestic economy and kill off confidence and spending power, it would consider the concept of a wealth tax rather than taxing family homes. The major political question which arises is why those in government have so stubbornly turned their faces away from that option, particularly when wealth taxes are accepted and levied and are standard policy in so many other European countries. We are not asking the Minister, Deputy Noonan, to break new ground here. Why does he so steadfastly refuse to consider, cost and investigate a wealth tax? The Minister has been extremely cavalier when it came to smacking another charge on people's family homes.

I am very conscious of the fact that we are discussing these matters in a very short timeframe and that this debate is taking place so close to Christmas. For very good reasons, people's thoughts are elsewhere because they are making preparations for themselves and their families in respect of the holiday season. I get the sense that those at leadership level within the Government may be assuming that this measure will be rushed through the Dáil, that it will send its Deputies back to their constituencies with the deal done, that they can retire to their homes and eat their turkey and ham and that everything will be done and dusted. I put them on notice that as the new year dawns, as the reality of the social welfare, health and education cutbacks hits home and as working class and middle income, middle class families do the maths on their domestic budgets, they are going to come under considerable pressure in respect of this matter. This will not be a result of the fact that people do not want to pay their taxes. Let us put that one to bed. People will pay their fair share of tax, especially as they know we are in a very difficult economic position. We are all grown ups and we all get that. However, the people know they cannot give the Government what they do not have and that it is not possible to take blood from a stone. They also know the real meaning of that four letter word "fair". This word has been gravely abused by the Government. This tax on the family home is not fair and the dogs in the street know it.

A demonstration against this charge took place outside the gates of Leinster House earlier this afternoon. I was approached by one of the protestors, a man from Wexford, who asked me to tell the Minister something. I stress that this individual is not a Sinn Féin voter. He asked me to inform the Minister that he pays his taxes and will continue to do so. He also wants the Minister to know that, as far as his family is concerned, the budget is very tough medicine to take. What he wanted me to tell the Minister most of all is that placing a charge on his family home - along with everything else that has been imposed - means that this matter has now moved from the political to the personal. I suspect that this man and many more like him will be outside the gates of Leinster House and Members' constituency offices in the near future saying they cannot pay this charge, that the Minister should be fair and reasonable and that he should tax wealth and not the family home.

Deputy Brendan Ryan

I welcome the opportunity to contribute to the debate on the Bill. There are many different aspects of it about which I could speak but I propose to focus on one. My colleagues, Deputies Kevin Humphreys and Robert Dowds, will address some of the other issues to which I refer.

As the Minister is aware and as he indicated earlier, there are many houses in north County Dublin, Leinster and throughout the country which have been affected by pyrite.

The effects of pyrite have been well discussed in this Dáil term by me and a number of other Deputies. Although progress towards a resolution is slow, we are moving towards a solution. We are not yet at a stage were the pyrite problem has been solved, but at the same time we are on the verge of introducing this local property tax which is to be based on the market value of a property. How much would anyone pay for a house with a pyrite problem? We all know the answer to that question. As the residents of pyrite affected properties will say, they are unable to sell their homes at any price, which, in essence, means such properties have no market value.

I ask the Minister to introduce an amendment to allow properties with a chronic structural failure caused by either pyrite or the use of substandard materials to be made exempt from the local property tax until such time as such properties are fully remediated. Such a measure would also exempt properties in complexes such as Priory Hall in Dublin. It would be very unfair for the owners of these properties to have to pay a tax on a property that has no market value. The exemption of pyrite affected properties is also recommended in the report of the pyrite panel which was published in July. I ask the Minister to consider my request. It is within his power and gift to ensure these homeowners are given some relief at a time when they are suffering so much. It has been mentioned many times in the House by many Deputies that the overwhelming majority of people who live in pyrite affected homes bought them at or near the height of the boom. They have very high mortgages and many have young families. This has been a difficult week for these middle income families. We now have an opportunity to give them a little comfort by exempting them from the local property tax. I understand there might be some technical impediments but none that cannot be overcome with enough political will, which I believe the Minister has.

I suggest the proposed lowest valuation band be changed from €0 to €100,000 to €1 to €100,000; and that a separate category of zero valuation be added. This would allow those living in pyrite affected homes, or the residents of Priory Hall, to declare a zero value rate for their properties and be exempt from the tax. The Bill, as it stands, provides that a person who declares a zero valuation for a property will be liable to pay a €90 full-year charge. I understand this would not be acceptable. The Government needs to act for those who have been the victims of cavalier builders and the light touch building regulation that defined Fianna Fáil's period in office.

The Minister for the Environment, Community and Local Government, Deputy Phil Hogan, is working on delivering a solution to the pyrite problem, generally. A solution will be achieved. However, until that moment comes, a gesture by the Government in the form of an exemption from the local property tax would be a tangible indication to the homeowners concerned that it is serious about addressing their problems. I look forward to the Minister's response and what I hope will be a commitment to exempt these hard-pressed householders.

The Minister said:

I am concerned about the phrase, "subject to a certifiable level of pyritic heave." It is proposed that householders will be required to pay for certification, but some householders may not be in a position to pay for such tests. I suggest, therefore, that they be permitted to declare that their propertie have zero value. They should not be subjected to further expense to prove to Revenue that their houses have been damaged by pyrite.

The Minister referred to exemptions for properties in certain ghost estates. He should not base the exemptions on the list drawn up in respect of the household charge. Some estates have been exempted and others should be. A full review is, therefore, required.

Deputy Kevin Humphreys

It is nearly 40 years since rates were abolished. The former residential property tax was confined to Dublin. Some speakers have recommended adopting elements of taxation systems in other countries such as the wealth tax in France but not its property tax and another tax from somewhere else. Deputy Richard Boyd Barrett's views on the increase in DIRT were very balanced in the debate on the budget. He said he regarded it as a wealth tax. On the other hand, Sinn Féin does not regard the DIRT as a wealth tax. I listened to Deputy Dessie Ellis's contribution. He and I were councillors. He ran a very efficient campaign against bin charges, the outcome of which was the privatisation of waste services in the Dublin area.

Deputy Dessie Ellis

Labour Party councillors-----

Deputy Kevin Humphreys

Now we see the effects of his campaign. Therefore, I take the views of the two previous speakers with a grain of salt.

The Bill provides that commercial and residential properties will be subject to tax in order to fund local government services. I ask the Minister if he will consider a tax on land. I have concerns that the tax cheque is to be handed over to the Custom House with no clear definition of how the money is to be distributed. I, therefore, ask for regulation or legislation indicating how the funds are to be allocated.

It is clear that home owners in Dublin will subsidise those in the rest of the country. Property in Dublin is much more expensive than elsewhere. In most small towns and rural areas house valuations will be in the lower valuation bands. I believe in social solidarity. However, wealthier areas of the country will subsidise less affluent areas. We all pay the same energy charges. Electricity services cost the same in County Kerry as they do in Dublin, even though provision in County Kerry is more expensive. Approximately 48% of the housing stock in County Donegal will be valued at below €100,000. This will mean a charge of €45 per house next year, a reduction of €55 on the household charge. Approximately 43% of houses in County Mayo will be valued in the €150,000 band. The average house valuation in Dublin city will be €300,000. Approximately 33% of homes in the constituency of Carlow-Kilkenny will be valued at the lower rates. The average charge in following years will be €90, a reduction of €10 on the household charge. There will, therefore, be a need for subsidisation to rebalance county council budgets.

This tax should not be seen as a Dublin tax, a Cork tax or a Galway tax. However, it will be difficult to explain to a homeowner in Ringsend that his or her small house is valued at a higher figure than a mansion in Leitrim or that his or her property tax will be used to subsidise hedge cutting in Manorhamilton. Has the Minister considered the introduction of a charge of €5 an acre on productive land? Will he tax brown field sites and land zoned for residential use to limit the number of derelict sites and the rezoning of land in urban areas?

I refer to Deputy Dessie Ellis's views on the voluntary housing sector. I question Deputy Ellis's figures. My calculation indicates that the cost per unit for voluntary and social housing is approximately €2. I am not sure how Deputy Ellis worked it out.

When this Bill passes through the Dáil next week, we will have a period in which to reflect, fine-tune and determine how the legislative mechanisms can be used fairly and productively. The proposed tax is a form of wealth tax. I look forward to hearing the Minister's response later in the debate.

Deputy Robert Dowds

I thank the Minister for his engagement on this matter, both inside and outside the Chamber. This Bill is one of the most important the Government will introduce and I welcome the opportunity to discuss it. As one with a keen interest in local government reform, I am particularly interested in knowing how the Bill will affect local government.

I am well aware that the Irish tend to be instinctively opposed to property tax despite the existence of the tax in pretty much every other European country. The tax has certain advantages in that it is a form of wealth tax, as Deputy Kevin Humphreys stated. This is why most left-wing parties in Europe support it. Broadly speaking, the wealthy pay the most, although I know there are some exceptions. The tax, if introduced properly, would provide an independent and stable income stream for local authorities. Transferring revenue-raising powers to local authorities would reinvigorate local democracy.

Could we calm down?

Deputy Mary Lou McDonald

The country is partitioned.

Deputy Robert Dowds

I did not interrupt Deputy Mary Lou McDonald when she was speaking.

Deputy Jonathan O'Brien

He does so every morning during Leaders' Questions.

Deputy Robert Dowds

We need to be deeply conscious of the fact that a high proportion of our population is either unemployed or affected by unsustainable debt. For this reason, deferrals of property tax for certain categories of people are essential. I welcome the deferral system, as laid out in Part 12 of the Bill. However, I ask the Minister to examine this again because there are inadequate provisions for those in serious mortgage arrears. We cannot get blood out of a stone. I support the Minister's not applying property tax for the first three years after the purchase of a house by a first-time buyer.

An issue arises regarding social housing. I suggest that all social housing, whether controlled by local authorities or housing associations, be valued in the lowest band. In other words, one would pay €90 for a full year, thus easing the operation of housing associations and the burden on low-income tenants.

We must ensure balance across urban and rural areas. I will not make my points on this matter because I largely concur with the remarks of Deputy Kevin Humphreys on the subject.

There are two sections on which I want to focus, namely, sections 20 and 157. There is a case for considering a greater local adjustment factor than that of approximately 15%, for the reasons alluded to by Deputy Kevin Humphreys. I ask the Minister to consider whether a 25% local adjustment factor might be more appropriate given the considerable gap between certain rural and urban areas. I say this although I accept we must have some equalisation measure.

It is very important that the proportion of the property tax that will go directly to the local authority be written down in black and white. In the Minister's speech, he referred to the Thornhill report and to 65%. Why is this not written into the legislation? I suggest the figure be higher than 65%. I ask the Minister to consider this seriously. To have this legislation accepted, it must be seen as fair. As presented, I do not consider it fair in regard to the division between urban and rural areas.

Deputy Jonathan O'Brien

The Deputy should vote against it so.

Deputy Robert Dowds

With regard to section 157, I am greatly concerned that the property tax revenue, as with motor tax revenue, will go directly into the Central Fund. I would like the proportion to be given to councils to be given to them directly. Central government should have no say in how the local authorities allocate it.

As one can gather, I favour property tax, but I strongly believe the Bill is flawed. For it to succeed in the longer term, we should have more time to consider it. I agree with the Opposition in that regard. I ask that we not rush the Bill through next week.

Deputy Peter Mathews

The sum of €3.5 billion is the start of this problem. The troika states we can operate according to our own sense of justice and equity but that we must make a saving of €3.5 billion. We have all accepted that. In principle, all things being equal, a property-based tax to fund local services is acceptable in normal circumstances. We are not in normal circumstances, however, but are trying to turn a tanker in a very short period. When doing so, one looks to the strongest shoulders. As the Minister, Deputy Noonan, will know from our internal meetings, I propose that there be, for three years, a national recovery levy on high incomes, namely, incomes in excess of €120,000. I stipulate €120,000 rather than €100,000 in the interest of families. Stability and support for families have been eroded over the past 15 years, initially with the individualisation of taxation. This is a sinister form of taxation that is anti-family. Erosion has occurred in other ways although I cannot elaborate on them now.

I commend Deputy Mitchell's contribution in which she pointed out the unfairness in terms of Dublin vis-à-vis Donegal with regard to what it costs to run local authority services per capita and how they can be funded. This taxation proposal is not fair in that regard.

There are three pairs of shoulders that could bear this load. First, a three-year national recovery levy of 4% could be placed on those on high incomes - that is, salaries of more than €120,000 - across the board; second, a 2.5% levy could be placed on multinational corporations or indigenous corporates, which would raise another €600 million at a minimum. If one adds up the revenue that would be derived from those two levies, it would amount to €1 billion. Third, a 5% betting tax could be placed on turnovers of €5 billion, which would produce further revenue. Those are three simple ways this revenue could be raised - three pools of reserves that could shoulder the burden of the sudden change that is needed for the next three years.

Deputy Clare Daly

I would like to share my time with Deputies Boyd Barrett, Wallace, Donnelly and Higgins.

An Leas-Cheann Comhairle

That is agreed.

Deputy Clare Daly

As a committed socialist, I can assure the Minister that, contrary to his earlier assertion that this tax on the family home is a tax on capital assets or some form of Marxist ideology, it certainly is not. The idea that a home for which people have spent a lifetime paying or to which, in other instances, they are shackled for another 20 or 30 years is some form of asset to be sweated is a total outrage which has struck fear into the hearts of residents the length and breadth of this country. It is not good enough for backbenchers to wax lyrical and voice their concerns in a weak-kneed manner. The Government needs to get real. For many people in our State, homes are a liability that they would get rid of if they could, but they would not realise even a fraction of what they paid for them. The idea that council tenants and tenants of voluntary housing bodies will have an extra debt burden foisted on them is abhorrent. The idea that the solution to the problems facing those in mortgage arrears, who cannot make ends meet, is to foist another debt on them is outrageous. To add to that, the sop given by the Minister - that the situation of those who have houses afflicted with pyrite, whose homes are valueless, will be examined in the finance Act - is not good enough. What sort of tax relief will they be given and who will determine the granting of such relief? Who will determine the certifiable level of pyritic heave? Who will pay for the testing and so on? Apart from all those people who are in dire economic straits, to add insult to injury, it is considered that people who are poor can have the privilege of paying extra. The Government deigns that the poor can pay more and that their families can pay more when they are dead. This is one of the most draconian Bills that has ever been put before the House.

People often talk, sometimes in exaggeration, about taking food out of the mouths of families or children, but that is literally what this legislation proposes. What the Minister is proposing, unlike any of his predecessors, is to forcibly put his paw into the pockets and into wage packets of workers and take from them moneys that they would otherwise spend on electricity, food and so on. The idea that he can do this without provoking a reaction is an absolute fallacy. He has clearly chosen to wage war and he will be met with outright resistance. In my opinion, this property tax, which is a home tax, will be the match thrown into the dynamite factory of Irish society. The Minister let the cat out of the bag and exposed the backdrop to this - that the reason he is doing this is not to improve our situation but to pay for the private debts of bankers and bondholders and the deficit in this State. The idea that taking money from people will only, as he said, have a small adverse effect on economic performance is rubbish. Next year he proposes not to take half a year's property tax from people but to take a year and half's property tax.

The Minister asked what our alternative is. I will give it to him in 20 seconds. Our alternative is that if he were even to enforce the existing rate of corporation tax - he would not have to increase it - he would get €4 billion in revenue, which is the equivalent of eight years of home tax revenue. People realise this is nothing more than daylight robbery and they will strenuously resist this measure.

Deputy Richard Boyd Barrett

I believe Deputy Mitchell said that this measure might provoke a revolution and I certainly hope it does. Even short of a revolution, it may well be the rock on which this Government perishes and I hope it is for the sake of the country and our economy. If the Minister proceeds with this measure, there is no question but that he will be driving hundreds of thousands of families into poverty and despair and he will devastate the already devastated domestic economy.

When we say that people cannot pay this tax, that is clearly apparent; the facts speak for themselves. Some 1.3 million people have less than €50 a month after they pay their bills, 40% of population have to borrow to pay their bills as matters stand and 22% of households are jobless. These figures are worse than those in Greece and Spain, for all the Minister's claims that we are in a better place than them. Some 160,000 people are in mortgage distress or have had their mortgages restructured. Those people, many of whom face an overlap of difficulties, are hit by all the different aspects of this crisis and they cannot afford to pay this tax.

If one's house in Dublin is worth €200,000, one will have to pay property tax of €405 per year or €33 per month. If one has two children, that tax liability will be on top of the loss of €20 in child benefit and, if one is working, the loss of €20 a month due to the removal of the PRSI exemption. That will push tens of thousands of people over the limit. They simply cannot afford to pay this tax. The imposition of the tax is a guaranteed, sure-fire recipe for plunging hundreds of thousands of low- and middle-income families into poverty. They will have no choice but to revolt and, believe you me, they will revolt. If the Minister thought he saw a major popular explosion against the household charge, wait until he sees the revolt that will occur as a result of this.

I appeal to the Labour Party and to the Fine Gael Deputies who have rightly spoken out against this measure and appealed to the Government, even though its members have not listened, to examine fair alternatives that would involve taxing the profits of corporations or those who have the money to pay, to break ranks with the Government, because it is sending the country down the Swanee. I appeal to them to stand with the people who elected them, to stand with this country and with the ordinary citizens and to break with this Government which will destroy the economy and devastate the lives of hundreds of thousands of families.

Deputy Mick Wallace

The property tax, at this difficult time, lacks fairness and good economic sense. The decision to give special new powers to the Revenue Commissioners to take money from people even when they may be struggling to put bread on the table is draconian in the extreme. This property tax, on top of all the existing challenges that many people face, will contribute to driving our domestic economy further into the ground, driving more of our young people out of the country and driving more people into poverty.

The political philosophy that drives this form of government thinking is not new; it is called neoliberalism. The world-renowned political writer Noam Chomsky describes it as the defining political economic model of our time. The term refers to policies and processes under which a relative handful of private interests are permitted to control as much as possible of social life in order to maximise their personal profit. Neoliberalism can rationalise anything from lowering taxes on the wealthy and scrapping environmental regulations to dismantling public education and social welfare programmes. Any activity that might interfere with corporate domination of society is automatically suspect because it would interfere with the workings of the free market, which is advanced as the only rational, fair and democratic allocator of goods and services. At their most eloquent, proponents of neoliberalism sound as though they are doing poor people, the environment and everybody else a tremendous service as they enact policies on behalf of the wealthy few. The economic consequences of these policies have been the same just about everywhere and exactly what one would expect - a massive increase in social and economic inequality, a marked increase in severe deprivation for the poorest nations and peoples of the world, a disastrous global environment, an unstable global economy and an unprecedented bonanza for the wealthy.

The ultimate trump card for the defenders of neoliberalism, however, is that there is no alternative, as the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, said on RTE radio this morning. Communist societies, social democracies and even modest social welfare states have all failed, the neoliberals proclaim, and their citizens have accepted neoliberalism as the only feasible course. It may well be imperfect but it is the only economic system possible, they argue.

Neoliberalism operates not only as an economic system but as a political and cultural system. It works best when there is a formal electoral democracy but not when the population is diverted from the information, access and public fora necessary for meaningful participation in decision making. As neoliberal guru Milton Friedman put it in his Capitalism and Freedom, because profitmaking is the essence of democracy, any government that pursues anti-market policies is being anti-democratic.

What we are left with is a political philosophy that amounts to a trivial debate over minor issues by parties that basically pursue the same pro-business policies regardless of formal differences and campaign debate. Democracy is permissible, as long as the control of business is off limits to popular deliberation or change. The neoliberal system, therefore, has an important and necessary by-product - a depoliticised citizenry marked by apathy and cynicism. We have that by the bucketful now. Could one blame our citizens?

Deputy Stephen S. Donnelly

I would like to start by voicing my opposition to the Government's use of the guillotine on this legislation. This is the second time it has happened in two days. Yesterday, the guillotine was used on the Social Welfare Bill. Such a move intentionally stifles much-needed parliamentary debate on these two critical Bills.

Before the last general election, the government parties talked a good talk about reform, a new type of politics and a meaningful role for Dáil Éireann. It turns out that it was just that - talk. There has been no democratic revolution, no maturing of political debate nor any meaningful role devised for Dáil Éireann.

I am not trying to convince the Minister for Finance of anything on this property tax. The arrogance of this Cabinet has rendered it incapable of listening to other people's ideas. Instead, I will use the few minutes I have to give a voice to those who cannot pay and to those who should not pay this tax. Starting with those who cannot pay, one in five mortgages is now either in arrears or is being restructured. One child out of ten is now in food poverty. Two adults out of every three have less than €100 a month when bills are paid. That was before their PRSI was raised and their child benefit was cut this week. Does the Minister think they will have a few hundred euro spare at the end of next year to give him?

As for those who should not pay, on what exactly are we taxing those who paid tens of thousands of euro in stamp duty and are now in negative equity? We are taxing their debts. Before the last election, the Government promised to help people caught in that trap. Instead, it has increased their income tax, cut their child benefit and caved into the banks on finding meaningful solutions to distressed mortgages. To top it off, the Government is now going to tax them on the debt that has financially destroyed them but, somehow, it will exempt first-time buyers from the tax, an extraordinary move.

This is not a wealth tax. If it were, the Government would not tax people in negative equity. It is not to raise money for local services. If it were, the Government would tax the occupier of the house who uses the local services and it would fully adjust for regional variations in prices. It is not a progressive tax. If it were, there would not be this meaningless single jump at €1 million. This tax is not fair. If it were, stamp duty would be considered and people in Wicklow, Dublin and other urban areas would not have to pay multiples of what other areas will pay. Most of all, this tax is not necessary. The figure used for how much this tax will raise is €500 million. It is not. Taking out €500 million from the economy is going to reduce economic activity. Using the Government's own multiplier, the Government will raise €350 million from this tax. However, next year's Exchequer figures include pay rises of €700 million for public servants over the past four years. The property tax will raise half the amount needed for pay rises to public sector workers. So much for paying for vital public services.

I have tabled amendments for Committee Stage that address all the issues I have raised but not one will be taken. If those on the government backbenches believe they have a role that can influence legislation, will they tell the Minister they will not vote this Bill through next week in its current form?

Winston Churchill said, “For a nation to try to tax itself into prosperity is like a man standing in a bucket trying to lift himself up by the handle.” Good luck with that.

Deputy Joe Higgins

The Finance (Local Property Tax) Bill is one of the most odious Bills to come before the Dáil in many a year. It is a tax to transfuse even more of the economic lifeblood of ordinary Irish people to the parasitic bondholders and bankers in the European financial market system and those gamblers who lost in their speculation on the Irish property bubble. Two Quisling Governments have salvaged them with a criminal austerity agenda making working class people pay instead. Labour and Fine Gael will go down in infamy for this legislation which will transform the homes of ordinary people from what should be a place of happiness and respite from a turbulent world into a source of constant insecurity and worry with a yearly tax demanded, along with draconian penalties and sanctions implied.

Each and every Labour Member who votes for this new home tax is guilty of sordid treachery against working class people. They have betrayed the people they pledged to protect during the general election campaign. Once the people get the opportunity, they will be swept aside and dumped as comprehensively and contemptuously as their Fianna Fáil predecessors were.

The Government cannot be allowed think that because it has given responsibility for this tax to the Revenue Commissioners, with the power to deduct it from source, that it has, therefore, an intimidated population at its mercy. The Revenue Commissioners will rue the day they were given responsibility for the administration and the attempt to collect the poisoned chalice that is the property tax. Revenue will face massive, prolonged, active and organised opposition. It will face a massive boycott of the process of registration and payment for the home tax in April, May, June and July next year. Revenue, if it tries to cow and intimidate decent taxpayers with draconian penalties, interest, court action and fines, will be fought in house-to-house combat with an organised campaign with regional and national solidarity. Revenue, if it instructs employers to deduct this home tax from workers' wages, will face strike action in both public and private sector workplaces as workers will move, inevitably, to defend their already much assaulted wages from a new, unjust and unjustified imposition.

Let no one take seriously the weasel words we heard today from some government Deputies who squealed about a possible injustice and unfairness to the home tax payers of Dublin because of higher house prices there. That is a cheap ploy to divert attention from their treachery and to curry favour with the constituents they are actively betraying in voting for this Bill. This will be in vain. The Government will not face division between urban and rural on the property tax issue but the national solidarity of working people, the unemployed and pensioners. There will be a common and national fight in solidarity against injustice.

Let us have no more of the mendacious formulations that the property tax is a broadening of the tax base.

Section 65 gives the lie to this once and for all since it instructs employers to take the property tax from the same wage that income tax comes out of, in the same way as income tax and at the same time. Let us have no more of this pretence that the property tax comes from some mysterious source other than workers' wages.

There is an alternative: no more of Irish workers' economic lifeblood to bondholders and bankers, tax the super wealthy, invest in public infrastructure to put hundreds of thousands of people back to work and remake this broken economy. It could then provide the taxes and resources we need for our services in health and education and for our elderly people and we could create a decent and sustainable life with dignity for all our people, young and old.

Deputy Michael Lowry

There is a reluctant but growing acceptance that a property tax will become a reality. The local property tax in its current form has sparked widespread concern and considerable anger from those who simply cannot take any more pain and who are now living in fear. The local property tax compounds the harsh effects of this budget on families, the elderly and those on lower incomes. The persistent message from my Tipperary constituents is simple: their income has been cut to the bone and any further taxes inflicted will devastate household finances. The budget has created a real fear that Revenue will come down heavily on vulnerable families for the local property tax. These families are understandably frightened at the wide-ranging powers of attachment vested in the Revenue Commissioners. Essentially, the Bill will allow Revenue to take money at source from a social welfare recipient, a farm payment, a wage packet or a bank account. These strong-arm collection tactics will lead to families sacrificing other essential needs to ensure the tax is paid. This may mean no heating will be turned on, no food will be on the table, bills will fall into arrears or the mortgage will not be paid. The deferral system built into the Bill is illogical and will serve only to saddle strained individuals with a mammoth bill later. In fact, it punishes individuals who cannot pay immediately by slapping a 4% interest charge per annum.

Many families have slogged and saved for many years to put a roof over their heads. They are now being crucified by these measures. The narrowness of the exemptions in the Bill will cause severe hardship and pain for home owners. A system based solely on the value of the property and which takes no other considerations into account is grossly unfair and inequitable. Why has no regard been given to other factors such as negative equity, stamp duty paid or an individual's ability to pay? There is no relief for those who purchased large homes in recent years but now have limited incomes. A large home does not necessarily equate to wealth. Many such people have seen their incomes decimated and are now struggling with a large house they can no longer afford to maintain. Many of these people invested their savings in a banking system that collapsed. Why is the income and wealth of home owners not taken into account? The Government has failed to protect those crippled financially by negative equity or mortgage arrears. It has simply ignored these present-day realities in our society and intends to impose a blanket charge on everyone, irrespective of ability to pay or the impact it will have on those on lower incomes.

What consideration did the Government give to a site valuation tax? Why was a decision made to pursue a tax based on the value of the property? How are home owners with no relevant experience to determine the market value of their home? What support will be given to assist home owners with the valuation assessment? Will a commitment be given that no adverse reaction will ensue if such a home owner erroneously undervalues his house? Who will be the final arbitrator where there is a dispute over the value of a property? If this power is afforded to the Revenue Commissioners, has due reflection been given to the fact that the Revenue has no experience of valuing homes or the property market in general? Where financial resources are limited or non-existent, will the Revenue Commissioners take precedence in collecting the charge over other creditors such as the banks? We are certain to witness many situations in which banks and mortgage lenders will be in competition with the Revenue in a mad scramble to get the first squeeze on the last euro from the property owner.

An Ceann Comhairle

I call Deputy Liam Twomey, who is sharing time with Deputies O'Reilly, Lawlor, Eoghan Murphy, Heather Humphreys, Feighan and Doyle.

Deputy Liam Twomey

Many people have had a good deal to say about this property tax. A good property tax will be progressive, help to keep property prices stable in the long term and encourage the appropriate use of housing stock. This is important because in the long term we need to ensure we have a sustainable housing stock. Although this may be a difficult time to introduce such a tax, in the long term it will be useful. The Minister will have to consider where a section of people are being significantly hit.

It is difficult to discuss this in our national Parliament because the angry man politics of recent days does not encourage us to believe there could be a reasonable debate. As a matter of interest, I went through some of the Sinn Féin proposals because I found them interesting. They are somewhat cloak and dagger. It appears that even a Deputy would be better off under the Sinn Féin budget than under the Fine Gael and Labour Party budget, an interesting interpretation. In the past half hour I have heard voodoo economics and people encouraging revolution, and it has hit a low point. Clearly, Deputy Boyd Barrett has never read a book about revolution, on what can actually happen to people in a revolution and who is most affected. He would be better off spending his time coming up with more sensible solutions which we could read over and examine to see if they make more sense than the nonsense we have listened to for the past half an hour.

We will do so. I have read the Sinn Féin website. I hope there is more clarity than on the Sinn Féin website where there was no clarity. It is anti-democratic to use the Dáil Chamber to stoke fear and anger in people. There should be a more solid debate about these measures and I hope there will be next week. There are problems with this legislation and many people on this side of the House have acknowledged that, rather than the derision and hatred from those in the Opposition when they mention these things. That is not the way a national parliament is supposed to work. I expected more with regard to this debate.

We know that many people in negative equity will face a serious crisis with regard to how they will pay this property tax. There will be some solutions produced beyond what the Minister has proposed to help people out. At least there is a game plan to what the Government seeks to do with the property tax rather than the Fianna Fáil flip-flopping. That party agreed to this with the IMF and that is wrong.

Those in Sinn Féin must think that no one in Derry listens to the "Six-one" news show. People in Derry are paying £1,500 for what is basically a property tax. The same party down here maintains that we should not have anything like it. That is hypocrisy and it amounts to misleading the people. It is contributing to the anger and frustration that people legitimately feel because we are going through the worst crisis the country has ever seen since the State was founded.

I had expected to say more about it but there is no possibility of holding a reasonable debate in the House, of discussing how to impose rates on businesses, how to tax the profits of businesses, how to help businesses that are struggling, how to apply the same rules to households under pressure, whether we should ask people who can pay more to do so or of holding a proper discussion about issues such as child benefit. Clearly, this will not happen when those in opposition are simply lazy and all they want to do is stoke up anger or pretend they are angry. That is all I have to say.

Deputy Luke 'Ming' Flanagan

That was inspirational.

Deputy Joe O'Reilly

A reasonable bystander in the Gallery this afternoon could only be struck by the hypocrisy and cynicism of the people speaking on the Opposition benches and by the quality of their debating skills.

In listening to Sinn Féin they will be aware that it supports the average £1,000 per annum property tax in the North. They will also be aware that Fianna Fáil accepted the concept of a property tax in the EU-IMF deal and that in its alternative budget which was not costed by the Department of Finance it proposed the continuation of the household charge which it laterally stated was unfair. The reasonable bystander will also be aware that the Members on the back benches who purport to be socialists are being contradictory in opposing the first reasonable attempt in a long time to establish a progressive form of taxation, one which has some relationship to property, wealth and so on, is a feature of virtually all modern democracies and vital in any meaningful form of local government. It is an appalling position to be in for people who propose to be left wing. It is accepted by the OECD, the ESRI and the Commission on Taxation that this form of taxation to reach our targets is the least threatening to employment. It is the safest option in our attempts to retain jobs. The bands are reasonable in that the bulk of people, whom Members on the benches opposite purport to represent, tend to live in houses worth €200,000, in respect of which the property tax next year will be only €112.50. In a full year it will be €225 and in 2014, €315. Homes worth more than €200,000 - let us be reasonable and fair - are in different terrain.

Deputy Michael Lowry asked how people would know how much they were to pay. There will be a direction from the Revenue Commissioners in this regard. The reason a site tax would not be inequitable is that there could be a mansion with a swimming pool, etc., on one site, while on the adjacent site which would be of the same value, there could be a modest dwelling. We will never have real local government until local government can raise revenue, which will be ultimate outcome of the introduction of this tax, is accountable to the people for how it spends revenue and until such time, as in the case of America and most other European democracies, as there is a relationship between local services and local taxation gathering.

While this proposal is not perfect and will require tweaking and monitoring, it is an attempt to achieve a progressive system of taxation and give teeth to local government. It is a real attempt at equity in that the lower bands are unthreatening. We are all aware that people are enduring hardship. That is not being questioned.

An Ceann Comhairle

The Deputy is over time.

Deputy Joe O'Reilly

In this House we have a moral responsibility to face up to the facts. We are either going to correct the finances and give future generations an opportunity or squander it on the face of opportunism. The responses of the Opposition have been hugely hypocritical.

Deputy Anthony Lawlor

I must ensure in the future that I do not follow Deputy O'Reilly.

An Ceann Comhairle

The Deputy is wasting time.

Deputy Anthony Lawlor

When I was young, I often accompanied my father who was a rates collector when he went to collect rates in Kilcock. Everybody paid them, regardless of whether they were living in a local authority house, on a farm or in a large property in a rural area. They were collected on behalf of the local authority and spent by it. People want to be assured that whatever they pay to the Revenue Commissioners will be paid over to the local authority in their area. As stated by Deputy O'Reilly, it is important that there be a connection between the person paying for services through his or her taxes and the local authorities.

I would like to raise a couple of issues with the Minister. I have tabled an amendment to section 133 which deals with executors of wills. The Bill, as drafted, provides that an executor must pay the property tax, even though he or she might not be a beneficiary. Perhaps the Minister might consider allowing the executor to defer payment until such time as the will has been dealt with.

Another issue of concern to me is that people living in housing estates who, like those living in apartments, pay management fees in respect of street lighting, internal sewers, repairs to footpaths, water systems and so on. These issues are not addressed by local authorities. Perhaps the Minister might consider an exemption for people living in estates already paying management fees in respect of repairs.

Despite the rhetoric of the Opposition, people throughout Europe pay property tax. It is extremely difficult to listen to Sinn Féin speak against the introduction of a property tax here while it supports such a charge in the North. Those socialists who have expressed their opposition to the introduction of a property tax here are at odds with their brethren elsewhere in Europe. I welcome the introduction of the property tax, in respect of which some tweaking will be required in the future.

Deputy Eoghan Murphy

While I understand the property tax has been designed in this way because it is, perhaps, the most efficient and effective way to collect it, I regret that I do not agree with it. Looking at it from a perspective that would be different from that of the Revenue Commissioners and from the point of view of reform of local government, the introduction of local service charges for households, thus shifting some of the burden from local businesses in bridging the democratic deficit at the local level, and from an urban perspective, I would not have designed the tax in this way. I admit, however, that I have not been able to design a property tax that would meet all of the necessary requirements. In that regard, I note the proposals brought forward by the Dublin Chamber of Commerce, in particular its idea of banding rural and urban properties together.

No one likes paying taxes. However, they are an essential element of the social contract. It is important to recognise some truths in this matter, even though they might not fit with the agenda that some in public life are trying to promote. In this economy those who earn more pay more, which is how it should be. We have a larger social transfer of wealth in this country than in any other European country, from the higher to the lower paid. This is achieved through the income tax system. We should not now be providing for a fiscal transfer from urban areas to rural areas by way of a national property tax as this undermines what is already being achieved through the payment of income taxes. Also, it poses a danger to social cohesion and is unfair.

While we want property prices in general to rise in order that some of those in negative equity can be lifted out of it, we do not want a return to the mentality of the past, when booming property prices were seen as a sign of progress and the property market was taken as an indicator of economic and general prosperity. There is a risk that levying this tax on the perceived market value of a property may do this. There is a further risk in relying on a tax designed in this way as a stable source of revenue, as we did in the boom years because it will be pro-cyclical and, in a recession, will lead to an impact in terms of declining government revenues, as happened recently.

On the particulars of the tax, we should attempt in some way to take into account those who in recent years paid stamp duty. This would only be fair, given the significant amounts paid.

On the concept of a mansions tax, this additional levy is not justified, as it is not based on the size of the property or its state of repair. It is notional and a penalty for which there is no real economic justification. It is grossly unfair to people living in Dublin who may be paying much more than those living outside the capital on a far smaller property. This also applies to the lower levy, not just the mansions tax.

On deferrals and exemptions, more work needs to be done in this regard. I support Deputy Anthony Lawlor's amendment on the executors of wills. As for occupiers, I they, not only the owner, should bear part of the burden.

I have corresponded with the Minister on this issue on a number of occasions this year. He knows where I stand on the matter. While I will support him in his decision on this matter, I will continue to work constructively to try to address some of my concerns with the current design before the tax is introduced. When it is implemented, we should move immediately to reform it to have a proper local services charge, to be raised locally and administered by the local authorities, one which would reflect the real costs of providing services for the people who use them.

Deputy Heather Humphreys

I welcome the opportunity to contribute to this debate. Having considered the Bill, I would like to raise three specific issues which have been raised with me by my constituents in counties Cavan and Monaghan.

Will consideration be given to people living alone who have no source of income other than the State pension?

I appreciate there is a provision to defer the tax, but for many older people, it is not in their nature to leave debt behind. Perhaps the Minister could look at some mechanism to take account of elderly people living alone. I also ask the Minister to consider also those who paid high levels of stamp duty that was subsequently squandered by the previous Government.

I wish to raise the issue regarding the executor of a will who has been charged with selling a house and dividing the sale proceeds between those who stand to inherit the moneys. Is it possible to ensure that persons acting in the capacity of executors of wills be included in the list of persons allowed to defer payment of the property tax, save where the executor of the will - and his or her spouse or partner - is the sole or joint beneficiary of the property concerned? This would eliminate persons deferring the payment of the tax indefinitely because they are also the only beneficiary of the property. This would also eliminate the need for executors to pay their own moneys in settlement of the property tax liability and while liability would continue to accrue, it would not become due until the property was disposed of. In such circumstances, would the Minister consider not applying a penalty?

Deputy Frank Feighan

After 14 years of reckless financial mismanagement of our economy, this country was in peril. This Government has a difficult job in trying to get the country working again. Taxes such as this one are very difficult to introduce. There is a very loud minority but there is also a silent majority who appreciate what needs to be done. They are sharing the pain, which is very difficult for each and every citizen.

There are no easy fixes and no soundbites that will get us back to where we were, but we must work together with a programme to get our country working again. It is not easy to introduce any tax but it must be fair and the Minister has done everything possible to ensure this property tax is fair. Many people have got into a frenzy and perhaps it is time for those in the media and on the social media to reflect the fact that we are trying to do a job in the most difficult circumstances. Tomorrow I will have 200 to 300 farmers at my door, but that is fine. I am able to face up to that because I believe I am part of a Government, with the Labour Party, that will ensure our country will be working again. I have no problem with standing up and fighting to ensure this country is back working again.

Deputy Andrew Doyle

I thank the Ceann Comhairle for the opportunity to speak on this Bill. We tend to forget that in 1977, when rates were abolished, their abolition was ridiculed as a political ploy and as economic recklessness. At the time I did not have a vote but I do remember people giving out, not about the rates per se but about the valuation method used. The old poor law valuation method was deemed to be archaic and out of date, which it was, and what it needed was reform rather than abolition. In 1977 we were recent entrants to the European Union, or the European Economic Community as it was then, and money seemed to be flowing in. It appears that we came to the conclusion, on the basis of money coming into Ireland in a never-ending stream, that we did not need the money collected by way of rates. We had the same situation after the advent of the euro, when people thought that money would flow in indefinitely. It was very easy and the Germans, the banks and others, who must bear some responsibility, decided that we were a good case for credit. Credit came in too freely without any proper oversight and we saw what happened.

Deputy Eoghan Murphy and others have referred to the property tax as a services tax and I would like this tax to be called thus. I would also have preferred it if occupiers were duty bound to pay some of the tax because that would have given a far stronger signal that the tax is for the provision of services. Fundamentally, the tax should be for services for householders. The money raised should be ring-fenced, as far as possible, for the local authority in the area in which it is collected. Furthermore, the people who collect it and are charged with spending it should be accountable to the public.

We need to look at fine-tuning the deferrals because there are many people who do not have an ability to pay and who paid dearly in terms of stamp duty on their houses. I know of a person who was not a first-time buyer and one third of his significant mortgage was for stamp duty. We must also evaluate the tax on an ongoing basis. Finally, I ask the Minister to clarify the issue concerning how far the powers of the Revenue Commissioners extend with regard to collecting the tax.

Deputy Robert Troy

As a relatively new Member of this House, I am deeply frustrated and disappointed by the manner in which the Government has scheduled debate in the House this week. As an elected representative of my constituency, I was given a mandate to represent the views of the constituents of Longford-Westmeath. This week, two very important issues which will affect every family, not just this year but for many years to come, have been guillotined. I was lucky enough to get five minutes to speak on the Social Welfare Bill and now I am lucky enough to get seven or eight minutes to speak on the Finance (Local Property Tax) Bill. The latter legislation will have serious ramifications for years to come but is being rushed through this House, despite that it will not come into effect until June 2013. This legislation should have been debated in the context of the Thornhill Report, which has been sitting on the Minister's desk for months and which he has not had the courtesy to make available to other Members of the House. By curtailing debate in this House, the Government is effectively telling the people it purports to represent that it does not wish to hear their views. Are we living in a dictatorship?

Admittedly a form of property tax was part of the original memorandum of understanding with the troika, but this Government has proven that the memorandum can be renegotiated. To its credit, the Government renegotiated on the minimum wage, on which I congratulate it. We all know the troika wants the targets to be met and my party supported the Government in its €3.5 billion correction this year. We also produced a costed alternative, A Fairer Way to Recovery. When Government party Deputies claim our proposals were not costed, are they telling the people that the replies to parliamentary questions are inaccurate? All our information was obtained through the Department of Finance and through parliamentary questions.

When the Government parties drew up their 2011 election manifestos, what did they say? Fine Gael said "an annual recurring residential property tax on the family home is unfair". The Labour Party, while it agreed with a site valuation tax, argued that further detailed study would be required to provide a fair basis for such a charge that would take account of the value of the property in different regions, the need to exempt some categories of home owners and the need to take account of those who recently paid large sums in stamp duty or who are in negative equity. That party's manifesto stated that such a charge could not be put in place "before 2014". Both party's positions have changed quite significantly since then, but then again, their position on many policy issues has changed significantly since 2011. The Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, said on television last weekend that it is okay for politicians to say one thing in the lead-up to an election and, once elected, to do a totally different thing.

My party's position has changed from where it was then. We believe this is a wrong tax at a wrong time. It is a tax on the family home which will hit struggling home owners at a time when they can least afford it. It will further suffocate a property market which is on its knees. It will reduce domestic spending and will, ultimately, damage the economy.

Let us look at the people who cannot pay this household tax. Figures released this week by the Central Bank show the true extent of the mortgage arrears crisis.

One in four family home mortgages is either in arrears or has been restructured. The simple reality is that 180,000 mortgage holders are experiencing difficulties in repaying their mortgages. How can the Minister expect them to pay a household tax when they cannot pay their mortgages? This comes on top of the Government's failure to support people facing mortgage difficulties. It has permitted the State-owned banks to increase mortgage interest rates and has given them a veto on the Personal Insolvency Bill. It has changed the qualifying criteria for people who apply for mortgage interest relief to make it much more difficult for those who are most in need of support. Now it is arguing that it is fair to tax their family homes because it is done in other countries. It is like giving a glass of water to a drowning person.

I have more to say about those who paid stamp duty or are in negative equity. This is a regressive tax. Take two houses in Mullingar valued at €150,000. In one house a family earns €20,000 per annum while the family in other house comprises a working couple who earn €70,000 or €80,000. Both families will pay the same household tax and both will take the same hit to child benefit payments, fuel surtaxes and PRSI charges. This tax takes no account of people's ability to pay it.

The budget was regressive, just like the last one. Is the Government that out of touch with the people it purports to represent? We proposed a fairer route to recovery which involves taxing those who earn more than €100,000 because they have broader shoulders, but the Government does not care about that. It wants to treat everyone the same, whether rich or poor. It is disgraceful that I will not even get ten minutes to speak on this Bill because of the guillotine. The Government does not want to hear the hard truths about how many people are suffering. How many members of the Cabinet know what it is like to live in a negative equity house? How many know what it is like to be unable to put food on the table? How many know what it is like for old people to turn the heat off in their homes at night because they cannot afford oil? I suspect that not one member knows or cares. What they are doing is utterly disgraceful.

Deputy Charlie McConalogue

How much time have I left?

An Ceann Comhairle

I am supposed to call the Minister at 5.45 p.m.

Deputy Phil Hogan

I hope Deputy McConalogue will make a better contribution than the previous speaker.

Deputy Charlie McConalogue

I hope the Minister was listening to the previous speaker because, unfortunately, the Minister has not been listening to the points raised by others. This is yet another regressive tax in a regressive budget. It will hit families on small and medium incomes in the same way it will impact on those on higher incomes. Other regressive measures in this budget include the removal of the PRSI exemption on lower incomes and changes to the car tax regime. These measures will impact on all families and, unfortunately, they are being introduced in a way that rolls back on the promises made by Fine Gael and the Labour Party. I join my colleagues in objecting to the way in which business was ordered for the House this week. I do not doubt the Government guillotined this Bill and the Social Welfare Bill because it does not want to allow the Opposition to challenge it on its failure to stick to the promises it made 18 months ago. Its efforts to stifle debate show it does not want the public to be reminded of the approach it is taking.

Deputy Cowen should know better than anyone how this was negotiated. The household tax has raised almost €113 million and 70% of liable owners have registered to pay it. That is a big difference from the 30% Deputy Healy predicted last year. I take this opportunity to thank the silent majority of the people who understand the difficulties we face and are prepared to contribute to local services.

Deputy Clare Daly

They will not thank the Minister.

Deputy Phil Hogan

Despite the efforts and rhetoric of Deputy Higgins and others, the majority have complied with this law. They are legally compliant because they want to be responsible citizens in helping us to overcome our economic and financial difficulties.

The politics of realism of so many people have prevailed over the politics of scaremongering and intimidation. The people who advocated against it have been roundly defeated by the law-abiding citizens of this country.

People who have paid the charge are right to ask what about the people who have not paid. Those who have not settled their household charge liability by 30 June 2013 will pay an additional €200 in addition to their local property tax liability. Already, we have witnessed a major increase in household charge compliance since the announcement that the local property tax will include outstanding household charge liabilities. Approximately 5,000 households per week continue to register for the household charge and the percentage of non-compliant households continues to reduce. A 70% compliance rate in the first year of any new charge represents a significant achievement. It is all the more notable when compared to the historic experience of compliance rates with other more established forms of taxation. I know Deputy McGrath, as a student of accountancy would understand that better than I would.

In its paper No. 98/20, the tax strategy group found that in 1987-88 approximately 60% of income tax payers filed returns for the financial year in question and that just 43% of companies filed returns of corporation tax by the due date. It is also interesting to note that since 1988, Revenue introduced a self-assessment system and tax compliance rates have improved dramatically.

I accept that in these difficult times €100 is a lot of money for anybody to have to pay and I applaud the majority of people who are mindful, despite the difficulties they have, of the need for compliance and that we have a 70% compliance rate so far. In this day and age, I do not expect people to pay money to local authorities without reform of local government. In the document I published some weeks ago, I set out clearly a more effective and efficient way of delivering local government services and of how in doing so we should be mindful of the fact that people who contribute locally expect no more nor no less than that from their elected representatives and their national government.

It is appropriate to reflect on some of the debate going on in the context of exemptions. With the household charge, we reflected on the difficulties people have, especially the vulnerable, and significant exemptions were made, particularly with regard to local authority and voluntary housing, for people on mortgage interest supplement and people in nursing homes and mental institutions. Vulnerable people in our community were not liable for the charge. I met a lot of people protesting outside my office and offices of other Deputies who were not liable for the charge at all. Perhaps the information campaign was lacking in some way so that people did not realise that.

I established a group under the chairmanship of Dr. Thornhill which went through the issues in regard to a local property tax in detail. All the details on what that group examined are on the website and can be accessed. It is not easy to come up with a system that will please everybody. The group looked at a lot of systems, including at a site valuation tax, a system which has been advocated. However, I do not know of any other jurisdiction where it has been implemented, so there is not a model we can go on that would be fair or progressive. Market value, whether we like it or not, brings up all of the various issues relating to the location of the dwelling and amenities it does or does not enjoy.

The diverse services being provided by local authorities must be maintained, such as road maintenance, libraries and fire services, but these are often taken for granted. As a member of a local authority for 21 years, I was often frustrated by the fact that the authority continually had to write to the relevant Department to seek moneys for various projects. Now local authorities will have the opportunity to vary the tax at local level, from 2015 - after the local elections - by plus or minus 15%. Hopefully, councillors will be responsible and be able to deal with the variations in value they see in their areas.

The democratic nature of a local property tax is something we have again now, having been abolished in 1977 by Fianna Fáil. We will watch how it develops over the next couple of years, in terms of local government funding. The relationship between local and central government must change. We cannot have a system of local government that is top-down. We want to see a bottom-up approach, where people will have access to funding for services and in terms of the authority of those democratically elected members of local authorities.

The issue of exemptions was mentioned by various Deputies, particularly for people on high mortgages. We have proposed a voluntary deferral scheme, which will provide for a situation where people with mortgage difficulties can have that recognised and be permitted to defer payment for a period of time. The same will apply to people on low incomes and social welfare.

The tax on property will be efficiently collected through the Revenue and the default position of the Revenue Commission will be that the tax will be deducted at source in the event it is not paid voluntarily. The introduction of the local property tax is an advance towards our national economic recovery. It is an advance towards giving people discretion at local level to provide services, without having to seek permission from national Government. Revenue from the tax will be put to good use and it is up to local authorities and local councillors to make sure that is the situation.

Question put.

The Dáil divided by electronic means.