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Dáil Éireann debate -
Friday, 23 Oct 2015

Vol. 894 No. 2

Management Fees (Local Property Tax) Relief Bill 2015: Second Stage [Private Members]

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

I wish to commence the Second Stage debate on the Management Fees (Local Property Tax) Relief Bill 2015. Essentially, the Bill is an amendment to the Finance (Local Property Tax) Act 2012 to make provision for a partial - I stress the word "partial" - exemption of property tax payable by a relevant owner whose property is located in a managed estate on which the owner of said property is liable to the payment of management fees and to provide for related matters.

Many people are living in managed estates paying management fees who must also pay local property tax. We understand the reason the local property tax exists. The essence of the local property tax is to provide funds to local authorities to carry out work they should do. However, in many estates nowadays there is a management fee to be paid. These could be housing estates, apartment complexes or a joint housing and commercial development, although the Bill has nothing to do with the commercial aspect of the estates. Some of these estates are quite big, with up to 900 dwellings as well as shops, a local pub, a pharmacy and child care facilities. The latter elements pay commercial rates rather than the local property tax. We will talk about that issue another day. The Bill relates specifically to people living in these estates who are subject to management fees.

Management fees became very popular a few years ago when local authorities began to include a condition in planning permission granted by them whereby there would be a management company to manage the public areas in an estate. It was probably a short-cut way for local authorities to avoid taking on the future liability of dealing with the open areas in some estates, as well as roads, footpaths, lighting and community facilities. In the past, this would have specifically included water and sewerage facilities also, for which local authorities previously had responsibility. Local authorities still deal with those matters, but now they act merely as agents for Irish Water. We will not get into a debate on Irish Water today because that is a separate issue.

People are paying management fees to companies to manage their estates and carry out work that in the normal course of events would be managed by local authorities if the estate was fully taken in charge. Such people are paying on the double for access to roads, footpaths, lighting and other public services in the immediate area, which could include pedestrian crossings and the maintenance of roundabouts. I do not suggest for a moment that people should not have to pay their management fees or the local property tax. The purpose of the Bill is to grant a partial exemption to those who are currently paying on the double. People understand the management of their estate and the fees they pay, whether they live in houses or apartments. We believe there should be a recognition that people are paying on the double, and to that end we propose a partial reduction in the local property tax equal to one third of the management fee, one third of the local property tax, or €100, whichever is the lower amount. Under the proposed legislation, nobody would ever gain more than €300. People who are in properties valued at €1 million with big management fees attached – some developments charge up to €2,000 – and whose local property tax is very high would not get an extra benefit because it is restricted to a maximum benefit of €300. That is the essence of the Fianna Fáil approach to all taxation and expenditure. The benefit should be geared towards people on lower and middle incomes and should not be skewed in favour of those at higher income levels, as has been the norm in all budgets in recent years from the Fine Gael Minister of State across the floor. In capping the benefit at €300 – most people would not be in that bracket – we specify that people would have to prove they had paid their management fee by producing receipts. Many management companies have difficulties collecting their income. A receipt of payment could accompany the payment of the local property tax and ensure a reduction of one third of the management fee. If the management fee was €450 then the reduction would amount to €150, and if the management fee was lower then the reduction would be less. If the value of a house in a development was under €100,000, for which the local property tax would be €90, it would get a reduction of only €30, which is one third. People in a house valued up to €150,000, the local property tax on which would be €225, would get only one third of that, approximately €75. For those in a house or apartment valued at up to €200,000, for which the local property tax would be €315, would get a reduction of only €105.

Based on data available from the Central Statistics Office and local authorities - I accept it is not an exact science - the best information we have been able to establish is that such a measure would be of benefit to approximately 200,000 dwellings in the private sector. It would not even be confined to the private sector, because local authorities have houses in some estates which they were given under the Part V arrangements for developments. That is another issue that is covered in the Bill. We estimate that the average saving per person would be approximately €86, based on people whose property tax is in the region of €300 to €400 and who have a lower management fee. Some people would save a little less if their property tax was lower, and others would save substantially more, but nobody would have a saving greater than €300. We estimate that the measure would cost approximately €17 million in a full year.

We published this legislation during the course of the year. I thank in particular my Dublin colleague Senator Darragh O’Brien for his work on the Bill. He met many people in his constituency in the greater Dublin area who raised the matter with him. They see the injustice of having to pay twice in the form of management fees and the local property tax. He instigated the Bill and he wants to speak on the issue in the Seanad, but because it is a money Bill it must first be introduced in the Dáil. I introduce the Bill essentially on his behalf. I acknowledge his good work.

However, the issue does not just affect the Dublin area; it affects every provincial town. Off the top of my head I can think of one large estate in Portlaoise, Kilminchy, which has between 600 and 700 houses and apartments. There is also a commercial area, which has nothing to do with the issue in hand. Management fees are payable there. I can think of housing estates in Mountmellick and Portarlington where management fees are payable also, and where people are liable for the local property tax. The issue is not just a Dublin issue; it mainly affects cities but it does stretch into every provincial town, especially in areas where local authorities insisted as a condition of planning permission that a management fee would be charged by a management company.

The issues outlined must be taken into account, particularly the plight of apartment dwellers in some areas. We estimate that the average saving per person would be €86, which is a modest amount.

We are only on Second Stage, and I do not know the timing of the legislation or when it will pass through the Oireachtas. If it is through the Oireachtas before the general election, we would be happy to implement it. At this point it is not, and I have no indication that it will be on the Statute Book in 2016. If we had had clearance from the Government, we would have had it in our budget proposals. In the absence of a commitment from the Government to support this, it would have been wrong to include it in a budget submission because the legislation would not be in place. It will be in our manifesto for the next general election and will be implemented as soon as possible, if Fianna Fáil is leading a government after the election.

Other issues also come into this debate. A partial or complete exemption should be introduced for those affected by pyrite. A restricted number of unfinished housing estates are exempt from the local property tax. When the household charge came in first, I recall that between 40,000 and 50,000 houses were exempt from it in the first year. When the local property tax was introduced, it was cut by 90% to approximately 5,000 houses. It is a very restricted list at this stage, which does not reflect the reality on the ground. There are many estates in which works are not yet completed. The definition of an unfinished estate that would allow it to qualify for an exemption from the local property tax is exceptionally restrictive. If the footpaths to the front doors of the properties on an estate are not finished, the whole estate is deemed unfinished. However, estates that have problems with water and sewerage schemes or other public services might not be considered unfinished and, accordingly, get no exemption. We need to re-examine the definition of an unfinished estate. We also need to examine the issue of estates that have not been taken in charge.

Apartment dwellers have been hit very hard by the Government with the local property tax based on the value of their apartments, as well as management fees. They have also been hit by water bills. It is unfair that the Government introduced a system whereby people would be charged for water when it knew that several hundred thousand dwellings, namely apartments, could never have a water meter installed. It is not possible to install a water meter in some apartment blocks and one cannot put a water meter inside everybody's apartment door. The logistics of this were never adequately considered by the Government. Everyone living in an apartment pays the local property tax and pays management fees to the management company but also has to pay the maximum amount in respect of water services. If they had a meter, they might have a much reduced water bill because water usage by an apartment might not be as much as that of a house. There is no question, for example, of an apartment owner having a hose to wash the car, water plants and look after a garden. Many apartment dwellers might not use their full allocation. However, Irish Water has no mechanism to ensure apartment dwellers can get a reduced bill because it cannot install water meters in apartment blocks.

What does the Government have against those who live in apartment blocks? I do not know why it has singled out that particular group specifically. It has singled them out for the local property tax, which is fine, but the Government knows that anyone who lives in an apartment block that was built over the past ten or 15 years pays a management fee, and this was not taken into account. It puts the water bill on top of that and ensures they have to pay the top rate with no possible reduction if they have a lower water usage. This leads us on to the broader issue of what exactly the Government has against people in apartment blocks.

The purpose of this legislation is to help people in apartment blocks and estates where there is a management company. Many of the estates can comprise detached, semi-detached or terraced houses. Some of these houses are even owned by local authorities, which got them under Part V arrangements for social and affordable housing. The council is paying the property tax because it is the owner, but also the management fee to the management company. Due to the lack of consistency in thinking this through, one can have the ridiculous situation of a local authority paying the management fee to a management company to manage the roads in an area that the local authority should have taken in charge. The more one thinks about it, the more one can see the merit in allowing some partial reduction in the local property tax. No one is suggesting a full reduction. However, a maximum reduction of one third should be allowed if it is higher than the equivalent proportion of the management fee, and subject to a maximum cap of €300. I hope the Government will accept this legislation and allow us to tease out the difficulties on Committee Stage.

I thank Deputy Sean Fleming for initiating this Bill and providing an opportunity to debate the local property tax.

The objective of the local property tax is to broaden the domestic tax base and to replace some of the revenue from transaction-based taxes with an annual recurring property tax. We know only too well how, in the past, transaction-based taxes proved to be an unstable source of Government revenue. By contrast, international experience has shown that property taxes are a secure and stable source of funding. It is also important to have a tax system that does not heap the entire cost of running the State on people going to work in the morning. Stability in our public finances is precisely what Ireland needs, now and into the future. Frankly, proposals from some on the Opposition benches to abolish the local property tax are reckless and irresponsible. I accept that Fianna Fáil originally opposed the tax, but its budget submissions for 2015 and 2016 included it. Moreover, the local property tax enables us to achieve our goals in a manner that does not have a direct impact on employment. The Government is steadfast in its determination to do everything in its power to protect and support the creation of jobs and ensure that the entire cost of our tax base is not heaped on those at work. As a measure that is a tax on assets, not employment, the local property tax will not adversely affect job creation.

The local property tax is fair and equitable, as the owners of the most valuable properties pay the most. Properties valued over €1 million are subject to a higher rate of 0.25% on the excess over €1 million. The local property tax legislation provides appropriately for ability to pay and conforms to international norms. It is now well established as a significant element of our taxation system. While I do not include Deputy Sean Fleming in this, some on the Opposition benches propose its reckless abolition. Despite this, the local property tax has a high level of compliance.

There is no choice in the matter.

It is important that its position be maintained, as research and experience internationally consistently show that taxes on immovable property are among the taxes that are least detrimental to growth.

In the course of introducing this Bill on First Stage, Deputy Sean Fleming indicated that approximately 177,000 homeowners were affected by management fees. Now, he claims there are 200,000 home owners who are paying management fees. On the cost of his proposal, he stated that the maximum cost of the proposal would be in the region of €17 million. From our conversations with the Revenue Commissioners, we are not sure where the figure of 200,000 homeowners is derived from, as it does not appear in the 2011 census. The Revenue Commissioners have indicated that without some figure on the number of properties that are subject to management fees and their average charges, it is not possible to cast the Bill’s provisions, as there is no basis in the returns made to the Revenue Commissioners on which to make an estimate.

It is likely that a considerable proportion of those paying management fees are landlords themselves, who are already able to deduct the cost of management fees from their tax liabilities. The Bill does not exclude landlords from the partial exemption proposed, so it would result in a double benefit for these landlords. Will the Deputy clarify whether that is his intention?

If we accept that the local property tax is necessary to fund local services and we do not want to see significant hikes in the tax, who will pick up the slack for the €17 million cost? Who will have to pay more, and what services in what communities does the Deputy wish to cut?

Due to its importance, the Minister for Finance asked Dr. Don Thornhill to conduct a review of the operation of the local property tax, with particular emphasis on any impacts on local property tax liabilities due to property price developments over recent years.

Dr. Thornhill is a distinguished former public servant who chaired the interdepartmental group on the design of a local property tax in 2012. In his report on his review of the local property tax, which was published on budget day, Dr. Thornhill makes a number of recommendations. His central recommendation is for a revised system whereby a minimum level of local property tax revenues in each local authority area would be determined by Government, ideally having regard to the apportionment between local authority areas of the historic yield. This in turn would allow for the estimation of local property tax rates for each local authority area and the application of these by taxpayers and Revenue. Local authorities could adjust this rate upwards by a factor of up to 15%. This new system is recommended by Dr. Thornhill with a possible interim deferral of the next valuation date until November 2018 or November 2019.

As announced in Budget 2016, the Minister for Finance will be making a proposal to Government to postpone the revaluation date for the local property tax from 2016 to 2019. This postponement means that home owners will not be faced with significant increases in their local property tax in 2017 as a result of increased property values. This gives sufficient time for the other recommendations in Dr. Thornhill's report to be considered fully by the next Government.

I note the Deputy's comments about pyrite exemption. The Minister made very clear in his budget speech that he accepts the recommendations concerning pyrite exemption, which I think was recommendation 11 in the Thornhill report. Among these recommendations is that local authorities be more engaged in supporting the Revenue Commissioners and also that they provide the general public and individual households with programmatic and other useful information on how they spend the public funds available to them and the proportionate contribution made by the local property tax. This is a very important recommendation. If people will be asked to pay money directly to councils, they need to see where it is spent and what it is spent on and there needs to be transparency.

The local property tax was designed on the principles of equity, transparency and simplicity. Under the local property tax, a liability applies to all owners of residential property with a limited number of exemptions. Limiting the exemptions available allows the rate to be kept to a minimum for those liable persons who do not qualify for an exemption. The more people one wishes to give exemptions or partial exemptions to, the more one increases the burden on other people paying the local property tax. I am sure Deputy Fleming does not want to do that to the many people in his constituency who do not live in areas with management companies.

There is no specific relief from the local property tax for the payment of management fees and there are no plans to introduce such a relief. Issues such as ability to pay are addressed through a system of deferrals, subject to meeting the qualifying conditions. Those who are liable for management fees to property management companies may be exempt or eligible for relief from the local property tax for another reason or may be entitled to avail of a deferral arrangement under the provisions contained in the legislation.

Generally, properties in managed estates, to which such fees apply, would have been purchased by their owners in the knowledge that they would be taking these commitments- as Deputy Fleming says it is often included as a condition of planning - and that it was the intention that many such estates would not be taken in charge by local authorities nor in some cases, would it be appropriate for local authorities to do so. Management fees in these estates may in some instances include services such as refuse collection, maintenance of common areas and a sinking fund for certain repairs to the buildings. This is an important point that the Deputy did not make. These are costs which homeowners in many other developments would have to fund themselves for their own properties. When one pays the management fee, one might get bin collection and maintenance of common areas included in that and a sinking fund if repairs are needed within the building. These are costs that those who do not pay management fees or who live in housing estates that do not pay management fees must meet from their own means. When the Deputy talks about double costs and double charges, it does not stand up to scrutiny when one considers that the management fee often includes the payment of services that other people living in other housing estates in other areas must meet from their own pockets. People in management fee estates pay for it through the management fee.

The introduction of the local property tax provides an opportunity for political reform at local government level. The local properly tax will provide a stable funding base for local authorities and it can be altered in the future. This is a good reform in local democracy whereby for the first time funds will be ring-fenced for local authorities. This gives our counsellors an opportunity to decide the tax base that is needed for their community and the projects on which they want to spend that money. We have not had that since the misguided removal of domestic rates by the Deputy's party when it tried to buy a general election in 1977. I hope we will not see that again. Revenue from the local property tax will accrue to local authorities and will support the provision of local services.

Local authorities provide a broad range of services in the public realm, the proper functioning of which are important for the well-being of every community and household. These include fire and emergency services, road maintenance and cleaning, street lighting and spatial and development planning. The net issue is that the local property tax applies to everybody no matter where one lives. It funds services in all our towns and villages and it is not envisaged that there would be a special category or a special exemption for properties with management companies.

In certain circumstances, private estates will be taken in charge by local authorities in accordance with the Planning and Development Acts. This is, of course, a matter for the Minister for the Environment, Community and Local Government and the relevant local authorities. However, it is germane to this debate and I will say a few words about it. I am informed by the Department of the Environment, Community and Local Government that the requirements relating to the taking in charge of residential developments are provided for in the Planning and Development Acts 2000-2015 and the Multi-Unit Developments Act 2011. Normal housing estates fall under the provisions of the Planning and Development Acts while multi-unit developments, which are generally apartment blocks and gated developments of not less than five units, fall under the Multi-Unit Development Act.

The taking in charge of residential estates by local authorities is provided for under section 180 of the Planning and Development Act 2000, as amended. Section 180(1) provides that in respect of estates which have been completed to the satisfaction of the planning authority in accordance with the planning permission, the planning authority must, if requested to do so by the developer or by the majority of the owners of the houses involved, initiate the procedures for taking the estate in charge. With regard to estates which have not been completed to the satisfaction of the planning authority in accordance with the planning permission and enforcement proceedings have not been commenced within seven years of the expiration of the permission authorising the development, section 180(2) provides that the planning authority must, if requested to do so by the majority of the owners of the houses concerned, initiate taking in charge procedures.

The taking in charge of an estate is achieved firstly by a declaration under section 11 of the Roads Act 1993 that the road or roads in question are public roads for whose maintenance the local authority will then be responsible. This is a reserved function and is a matter for the elected members of a local authority. The Department of the Environment, Community and Local Government issued updated policy guidance to planning authorities in 2008 on the taking in charge of residential developments and management arrangements. This required each planning authority to develop or update, as appropriate, its policy on taking in charge by the end of June 2008 based on the following principles. They include certain core facilities or infrastructure to be taken in charge on request and the procedures for taking in charge to begin promptly on foot of a request by the majority of the residents in the development or by the developer, as appropriate.

In accordance with the Multi-Unit Developments Act, and this is also generally specified in the conditions attaching to the planning permission, developers are required to transfer ownership of the common areas of a development to an owners' management company which then assumes responsibility for the ongoing maintenance, management and refurbishment of the overall development. Property owners in a development are members of, and are represented on, the management company and are obliged to pay the annual maintenance and service charges applied by the management company.

Given the scale of the infrastructure maintenance and the range of other services provided by a multi-unit development management company, the annual service charges or management fees applied can be quite expensive. Without these service charges, the development would fall into disrepair. They are, therefore, applied for both the short and long-term benefit of the property owners in a development. They relate solely to the ongoing maintenance, management and refurbishment of a development - not the community, town or village, which is what the local property tax refers - and are confined to costs incurred by the management company within the boundaries of a development.

For people in unfinished estates, the Finance (Local Property Tax) Act 2012, as amended, provides that a residential property will be exempt from the local property tax where it is situated in an unfinished housing estate that is specified in a list prescribed by the Minister for the Environment, Community and Local Government for the purposes of the Act. The Minister for the Environment, Community and Local Government has prescribed and published this list, which is set out in the Schedule to the Finance (Local Property Tax) Regulations 2013 and was compiled by local authorities utilising the categorisation employed for the purposes of the national housing survey 2012.

For individuals on low incomes, the local property tax legislation provides for the possibility of deferring the charge to local property tax in certain cases. To qualify for a deferral, the residential property must be occupied as a sole or main residence. The income thresholds for a full deferral are €15,000 for a single person and €25,000 for a couple, regardless of whether they are 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.

Some property owners may find themselves unable to pay the local property tax but do not qualify for a deferral under the income conditions. For this reason, the Finance (Local Property Tax) (Amendment) Act 2013 provides that a person who has entered into an insolvency arrangement under the Personal Insolvency Act 2012 may apply for deferral of the local property tax that is due during the period for which the insolvency arrangement is in effect.

The 2013 Act also provides that a person who suffers an unexpected and unavoidable significant financial loss or expense, as a result of which he or she is unable to pay his or her local property tax without causing financial hardship, may apply for a full or partial deferral. The vulnerable are protected by these legislative arrangements.

I was somewhat taken aback by Deputy Fleming's question as to what we have against people in apartments, particularly in view of how the absolute economic chaos he, his Government and the policies they pursued and cheered on put those people living in those apartments in a situation where they found themselves in negative equity and losing their jobs. We are supporting them by getting them back to work and trying to restore the housing market to some level of stability after the chaos. I was impressed by how the Deputy managed to mention the issue of water charges without blushing when we know his party leader sat around a Cabinet table and agreed with his colleagues to introduce a flat water charge of €500 per house. I presume - we will have to probe this further - that it would have applied to everybody living in an apartment as well. I do not know whether it is parliamentary to say he has some neck, but this new-found love for people in apartments and his new opposition to water charges are quite stark. I look forward to debating these issues.

The local property tax has been introduced, is achieving a high compliance rate among taxpayers and is providing a stable base of funding for our local authorities. If we introduce more exemptions, somebody else must pay and that pushes the burden onto other people. The Minister, therefore, is not in a position to accept this Bill, but I thank the Deputy for raising the matter.

I am one of those recklessly irresponsible people the Minister of State described who were opposed to imposing a tax on one's private home. The Taoiseach agreed with me on that, but obviously he changed his mind. However, he was of that opinion at one time. Obviously people get different ideas when they secure power.

The Minister of State said that compliance with the property tax is very good. Perhaps I am considered a compliant payer because I am paying, but I did not offer to pay. It is being taken from my wages against my will. My idea of compliance must be different from the Minister of State's because people have no choice but to pay it on foot of the legislation the Government introduced to provide for it.

Regarding the Minister of State's last point hammering Fianna Fáil with the notion that it might have charged €500 for water-----

It is a lot of money.

Yes, it was a little frightening. However, it will not be long before we are paying that amount anyway. It has already gone over the £500 level in Britain. The companies that run the water companies there are making a fortune from supplying water. They have become very wealthy. Anybody who thinks water will be cheap in this country a few years hence is living in cloud-cuckoo-land.

Deputy Fleming asked what the Government might have against people living in apartments. I must agree that people who live in apartments, especially in large apartment blocks, have a huge extra expense. Before I speak about apartments, the Minister of State said in response to the Deputy's arguments that there is a level playing field with regard to housing estates. I cannot accept that. Housing estates that were built years ago in Wexford do not have management companies, so there are no management charges. The local authority takes care of matters. However, more recently built estates have management companies and a management fee must be paid. Both pay the same local property tax. Many of these houses have been bought and are now privately owned. I do not know how the Minister of State can argue that the two are on a level playing field, because the field is not level.

With regard to apartments, management companies will become extremely problematic in the city. Sadly, I was a director of about seven of them and I could not wait to get out of them. They are very difficult and problematic to run and are very expensive. People in Dublin are paying up to €2,000 per year in management fees for apartments, and it is not because they are being robbed by the management companies. There are good and bad management companies, just as there is good and bad in everything in business. However, if an apartment block has five lifts, for example, the cost of maintaining the lifts is astronomical. The five lifts might serve 30 apartments, which is not as unusual as one might think. If the block of 30 apartments has only one lift, it is obviously much cheaper. Many people went into this somewhat on the blind side. They signed up for leases which provided for a management fee, but many of them are shocked at how high the fees are. The average for Dublin city, especially in the city centre area, is probably €1,600 to €1,700 per year. If people are paying this for management services, it is draconian to ask them to pay the property tax as well.

The Minister of State made the point that if Deputy Fleming's Bill were passed, and I support it, an extra amount of millions of euro would be missing and he asked where we would get it. If any action such as this were taken, money would have to be raised elsewhere. However, surely fairness is a major aspect. The concept that we create as level a playing field as possible to treat everybody fairly must be a strong factor and mitigate against the extra cost. We know that everything costs money, but a government must have the primary objective of applying fairness in any way it can.

The management companies carry out cleaning that is not done by the local authorities. For example, the management company in Quartier Bloom, the Italian quarter which we still control, cleans the area. The local authority does not get involved in the cleaning of the outside areas. We must do it. However, other people have the benefit of the local authority cleaning the area around their apartments and they might not have a management fee. There are people paying money to management companies for things that the local authorities do in other areas. Due to how the apartments are structured, the management fees will not go away. The apartments are expensive to look after and that will not change.

Legislation will probably be required in the management company area. There are many problems in that area which I do not have time to discuss in detail today, but it will become a bigger issue over time. The idea that people should pay €1,600 to €1,700 per year as well as a property tax should be re-examined. It definitely deserves further thought because it is just too big an ask for too many people.

A point was made about people in apartments having to pay the flat water charge. It is significant that charging for water was not envisaged when planning for apartments was given over the past 20 years. It is a surprise to the people that they now must pay directly for water. Obviously, I do not agree with it. Deputy Fleming mentioned that the chances of putting meters in these buildings are quite slim. It can be done, but at huge cost. If water becomes so expensive and if a private company ever gets control of it, it probably will set about doing that but I presume, although I have not seen any planning conditions recently, that one will have to put meters in the basements and instead of running one pipe to feed 15 apartments there will have to be 15 pipes and a meter on each of them in the basement. Putting them outside the door of each apartment is not really an option because it will create a problem with regard to giving people access to check them and so forth. It would have to be done through the basements. Most of these apartment blocks will not be rectified or retro-fitted with meters so imposing a flat charge on them is draconian.

It is another issue the Government should examine.

Fairness and the need to create a level playing field dictate that the Government is a little hasty in not supporting this Bill. It deserved some consideration. Even if it were allowed to move to the next Stage we could have a serious debate on it because there are pros and cons around the entire area.

The Bill, in so far as it goes, provides some relief, and we support it on those grounds, but why is it restricted to equal of one third of the local property tax, LPT, or €300, whichever is the lower figure? It seems limited but, however, it does provide some relief and on those grounds, we will support the Bill.

The key issue is the abolition of local property tax, which we included in our recent budget submission, in the same way that Sinn Féin councillors, whenever we were in a position to do so, supported the reduction of property tax on local authorities as an interim measure pending, hopefully, the eventual abolition of that tax.

Management fees were but one of the many extra charges imposed by developers during the Celtic tiger years. I am talking about managed developments, but it was also charged on ordinary housing estates for a number of years. When people bought their houses they were tied in to contracts under which they had to pay management fees. In some circumstances they are justified where there is a reliable security system and maintenance but as referred to by a previous speaker, it is a very difficult situation in many estates where extortionate charges are being imposed.

In many cases the developer and the management company is one and the same and is simply being used as a cash cow for the developer, while carrying out little or no maintenance or improvements in the estate. Approximately 200,000 homes are involved. In one example, an apartment owner who came to public notice was given a €2,000 management bill for, among other things, landscaping, tree-cutting and tree removal, even though the apartment block was on a street of terraced houses with neither trees, gardens nor green areas. That type of practice is taking place as well. When the person refused to pay the amount, he was issued with threats that his apartment would be removed from the block's insurance policy, and that the management company would begin legal proceedings to recover costs and an application made for the repossession of his property. That is probably an extreme example but it is clear there is a good deal of abuse with regard to management fees, and that issue should be addressed, apart from the proposal in this Bill, which I support. There are examples in Laois of people being charged up to €1,000, with little or no service being provided. There are some good examples, however, where the management company is like a co-operative in that there is buy-in from all the local residents, all of whom are active members of the management company.

Management companies were mentioned by a previous speaker in regard to Kilminchy, which is 90% taken over by the local authority. It is not run by a management company. There is a small estate adjacent to Kilminchy that is under the control of a management company but there are others also. Rankins Wood and Maryborough Crescent, in Portlaoise, are among many where management companies are involved. The crucial difference is that the residents are responsible for the lights, footpaths and green areas. If someone is living in an ordinary housing estate or on a street, the local authority is responsible as far as the step of their door but the residents in these developments are responsible for the landscaping, boundary treatment and maintenance, footpaths, roads, lights, water services in and out and everything else within the development, and there is a large cost involved.

A person living in a development very close to where I live was a little behind in paying their management fees. They happened to be a commuter who was paying a serious amount of money and another range of taxes to the Departments of the two Ministers opposite me, the Minister, Deputy Noonan, and the Minister of State, Deputy Harris. That person came out of her house one morning to find her car had been clamped by the management company. That is not the first case of that happening to someone. It took that women a couple of days to get her car released. She could not travel to work. She was caught in an awful situation. It is clear that abuses are taking place in this area.

Regarding local property tax in general, it is clear that it unpopular to impose a further tax burden on already hard-pressed citizens such as the woman I mentioned. When it was introduced by the former Minister, Phil Hogan, he claimed it was necessary to help maintain public parks, libraries, lighting and footpaths through contributing via the local authorities' Local Government Fund. In fact, what we saw last year was the Local Government Fund being raided to subvent Irish Water. It is ironic that the amount taken out was almost the same as that raised through the property tax.

Obviously, the Government has realised that property tax is unpopular and made a gesture towards that in the budget, but we are getting near the time for an election. However, the decision to freeze any increase to reflect rising property values until 2019 is only a temporary stay of execution as home owners will be faced then, or if a future Government changes the legislation or makes a move in the next budget, with a much larger jump in LPT in 2019. In any event, the Government measure has been overtaken by the fact that many local authorities had already decided to avail of the option not to increase the tax or to cut it by up to 15%.

Unfortunately, that is a double-edged sword as local authorities have their funding reduced equal to the amount of the local property tax. Local authorities are faced with a situation where locally provided services are badly hit by the reductions in their funding from central government. In the case of Dublin, the yield from property tax in 2016 for Dublin City Council would have been hit by €77.5 million but the reduction of 15% would reduce that €77.5 million by more than €11 million.

Some Government supporters have argued that reducing the rate on such councils is deliberately hitting their own services. However, Fine Gael councillors, along with Fianna Fáil and Sinn Féin, all proposed motions calling for a 15% reduction so not only do all the parties agree that local property tax is too high, all of them, and many councils, implicitly support the Sinn Féin view that local authorities and local services should be supported out of general taxation and other charges. We presented options such as packaging levies, waste levies and a second home tax, which is an option; that is one the Government did away with. Instead of going for the option of taxing speculation, it taxed the family home.

The funding to local authorities has been drastically reduced in real terms over the past five or six years. As I pointed out last year, the proceeds from LPT were, in effect, handed over to Irish Water, and we know the way that is being wasted and literally being poured down the drain. Not only are households expected to pay for water through water charges, therefore, they are also hit by having the funding that was supposed to go to local services diverted down the drain to Irish Water.

Our party made a submission to the review of the local property tax before the budget. We put on record our opposition to LPT and recommended that the tax should be abolished. If elected to government after the next election, that is what we are committed to doing. In our submission, Deputy Pearse Doherty correctly pointed out that the review is intended simply to provide political cover to the Minister for Finance rather than as a genuine investigation into LPT.

He correctly stated that the Minister, Deputy Noonan, was planning to announce a freeze on the link with property prices, which of course he did in the budget. The review and the voting record of Fine Gael councillors in Dublin and on other local authorities prove that Fine Gael has realised that the local property tax, LPT, is extremely unpopular, not least among its own supporters.

Our position is that the LPT is a failed tax. It has failed in its stated objectives and is simply another unfair tax implemented with the excuse of an economic crisis. Nor does it provide any new services. With 110,000 households in mortgage distress, it is unacceptable.

We talk about negative equity. Looking at the county I live in, along with south Kildare - the Monasterevin area, Portlaoise, Mountmellick, Portarlington and towns like that - I can see that the people who have really been hit with negative equity are those in apartments. Apartment prices have literally fallen through the floor. While houses in some areas have held up reasonably well, perhaps taking a 30% or 40% hit, there are apartments that are not worth 20% of what it cost to build them. Take Parkside in Portlaoise as an example. The Minister of State should just look at what the apartments there were bought for and the prices they have been selling at over the last year or so. In some cases they are selling for a quarter or one sixth of what they cost in the first place.

We support the Bill. We would like to see the total abolition of the local property tax. In respect of previous comments on management companies, legislation will be required there because we are going to have problems with management companies down the line. They were not properly thought through in the first place.

I thank all the Members who have contributed to this debate. As I stated earlier, the Government cannot support the Bill, and I have outlined why we are not in a position to do so.

The introduction of the local property tax in 2013 was the largest extension of self-assessment in the history of the State, with more than 1.3 million taxpayers obliged to file LPT returns and pay the tax in respect of around 1.9 million properties. The first valuation date was 1 May 2013 and the valuations declared for that date determined tax liabilities for half of 2013, 2014, 2015 and 2016. The next valuation date would be due on 1 November of next year, which would determine tax liabilities from 2017 to 2019. However, as the Minister, Deputy Noonan, said in his budget statement, he will now make a proposal to the Government to postpone the revaluation date until 2019. This postponement means that homeowners will not be faced with significant increases in their LPT in 2017 as a result of increased property values. It will allow the next Government, whatever its composition, to give serious consideration to the excellent work done by Dr. Thornhill in the report that the Minister asked him to carry out. A number of recommendations are contained within that report.

The local property tax is producing a stable revenue yield for local authorities and, although the tax rates are modest by international comparison, the charge is progressive. I am quite surprised that Sinn Féin is happy to support a Bill that would mean that landlords, who could own multiple properties and could actually claim back tax relief on the cost of management fees, could get an exemption or partial exemption from property tax and then pass it on to other people, maybe more hard-pressed families. It seems like quite a peculiar position.

As I have stated previously, the introduction of a property tax is part of a broader approach to taxation of property which aims to replace some of the revenue raised from transaction-based taxes. We do not believe that all of the tax base can be levelled on work. We know that is a disincentive. I know from the pre-budget submission that Sinn Féin is in favour of having a marginal tax rate in this jurisdiction that is almost 20 percentage points higher than up the road in Belfast. I debated the issue with Sinn Féin's finance spokesperson.

It is not false. It is a statement of fact. He agreed with me on RTE television. Deputy Stanley can look back at it. Sinn Féin is also in favour of having a corporation tax of nearly 40% here, while it is 20% in Northern Ireland.

Twelve point five percent.

It simply does not make sense. I do not understand the Deputy's point about Fine Gael councillors being allowed to express their opinions as to what is best for their communities, as did Fianna Fáil and Sinn Féin councillors. While Deputy Stanley's party might favour a central control type of structure, in my party we put forward candidates and let them get elected for their communities.

The whole essence of the local property tax is that people elected locally can look at the tax situation for their communities and decide what projects need to be funded. It is their decision to lower the local property tax in an area or to put it up. They can ring-fence it and decide what to use the money for - playgrounds, more roads or maintenance. They are decisions that people who are elected to local government get to make. It empowers them. In areas such as Dublin, as the Deputy has rightly said, his own party has agreed with mine and Fianna Fáil that there was scope to lower the local property tax. They are local decisions and that is what we should be doing.

We will have to debate the Deputy's argument about water charges another day. Even his friends in Syriza pay water charges.

Take it up with the New Democracy.

I am not sure whether Sinn Féin's policy on the abolition of property tax extends to Northern Ireland, where the tax is much higher. The party leadership is happy to pay a higher rate of property tax to the Government of the United Kingdom but does not wish to pay one to the Government of the Republic of Ireland to fund services at a local level.

Dr. Thornhill's report provides a very interesting basis on which to debate and consider this tax. We cannot simply keep taxing those who are getting out of bed in the morning and going to work. We have to broaden the base. I accept the bona fides of Deputy Fleming in putting this Bill forward. I accept his views on it, but I do think it would have significant unintended consequences. If we blow a hole in the tax yield, be it €17 million or whatever it turns out to be - Revenue is not sure - that has to be paid by somebody else. We cannot just allow money to disappear and say that services will continue. It is going to have to be passed on to somebody else.

Deputy Wallace made the point that people in housing estates with management companies are paying the same amounts and those in management companies are not getting anything extra for their management fee. That is just not true. I live in an apartment. I rent it so I do not pay the management fee. That fee includes waste collection, washing the windows, and the maintenance of the area outside my apartment in terms of carpet cleaning and all that sort of stuff. My parents live in a housing estate in Greystones. They do not get the windows washed or the bins collected. They have to pay for those out of their own pocket. There are substantial differences and we need to be honest in announcing them.

The Minister for Finance is satisfied that issues such as ability to pay are being addressed. There are exemptions in certain areas and he does not propose introducing any more. We are therefore not in a position to accept the Bill.

I want to briefly reiterate the essence of the Management Fees (Local Property Tax) Relief Bill 2015. The Bill proposes that where a person is liable to pay an annual management fee to a management company in respect of a property, he or she should have a partial exemption in respect of his or her local property tax in the relevant year on confirmation that the management fee has been paid. This would be a modest amount, equal to one third of the management fee, one third of the local property tax, or €300, whichever is the lowest. It is a very modest recognition of the double charge that people are paying. I acknowledge support from Independent Deputies and from Sinn Féin in this regard. Some people think we should go much further in respect of the local property tax. That is a valid opinion and a point for another day. I believe that while the tax is there, we want some amendment to it. This is a reasonable and modest proposal. It was not intended to be very broad-ranging. It was meant to be limited and confined.

I must respond to some of the issues the Minister of State raised in his script, which was obviously considered in detail. He said there were no plans to introduce the relief I am looking for and, as a result, the Government cannot support the Bill. That is very disappointing. We will have a vote on the Bill and we know the Government has the numbers. I actually thought the Government did raise some interesting and worthwhile points that should have been discussed on Committee Stage. Instead it has said it will not even allow us to discuss the Bill on Committee Stage. One such point was about landlords. That is precisely what Committee Stage debate is about in this House - tweaking and amending the legislation to deal with those issues. I worry about a Government that takes such a high-handed, arrogant approach. In an open democracy, people should be allowed continue this debate on Committee Stage. I am sure it would be possible to deal with the particular nuances. To say it will not even allow that says something about how this Government is operating.

I enjoyed the history lesson provided in the Minister of State's script.

He said the local property tax was good for local democracy because, for the first time, funds would be ring-fenced for local authorities, something we have not had since the misguided removal of domestic rates in 1977. I do not know if anybody in the House remembers that. The Leas-Cheann Comhairle may do so.

I saw it on "Reeling in the Years".

The Minister of State attacks us for what we did four or five years ago but if he wants to go back some 40 years to attack us, he will need a new generation of scriptwriters because most people under 50 will not know what it is about. We know our political history, so we know what was involved. It is not true to state that money has not been ring-fenced since the removal of domestic rates and I am shocked that somebody would say that in the Chamber. Is the Minister aware of the local government fund?

I am very aware of it.

Then let us talk about it. The motor tax of approximately €1 billion, the local property tax of approximately €500 million and the money from the plastic bag levy were ring-fenced for the local government fund each year. As a result, saying that money has not been ring-fenced since the abolition of domestic rates in 1977 can only be explained by someone getting carried away when writing the Minister of State's script. These items used to be ring-fenced for local government until the Government established Irish Water. It then decided to take one third of the money out of the fund for Irish Water, its pet project. We had a ring-fenced fund but the Government has raided it in the past couple of years to hand money over to Irish Water.

The most depressing thing I heard from the Government side today is that, despite the fact that this was introduced in the Dáil over four months ago on 18 June, the Department of Finance has said it has not been possible to cost it. I would hope that if we were in government again, we would have a Department of Finance which would be able to cost such a proposal.

It was the Revenue Commissioners.

It is the public sector - I do not distinguish between Revenue or the Department of Finance in this instance. It is an extraordinary admission of failure in the public service. If that is the public service over which the Government presides, then it is not doing a good job. It is not satisfactory that the Department of Finance can say that and it is extraordinary that the Government is not prepared to even allow the Bill to proceed to Committee Stage, where all of the matters under discussion could be teased out in further detail. The admitted failure on the part of this Government to find someone within its own ranks or in the Departments of Finance or Public Expenditure and Reform to cost election proposals is why my Fianna Fáil colleague, Deputy Michael McGrath, introduced a Private Members' Bill to allow the Fiscal Advisory Council to cost party election manifestos. There was a time when parties could get a reasonable estimate of costs. The Government is saying that election proposals from the Opposition have not been costed. However, the only reason they have not been costed is because the Government is refusing to allow this to happen. To respond, four months later, with a statement that it cannot be costed is an admission of a poor approach to legislation that is brought before this Parliament.

I will deal with the thorny issue of Irish Water, which the Minister of State mentioned, as he did the memo regarding the flat-rate charge, which was discussed by Government a few years ago. Several proposals are discussed at Cabinet every month of the year, and, rightly so, because all options should be considered. Just because something is discussed it does not mean it is going to be ultimately implemented as policy.

Mary Hanafin was in favour of it.

A menu of options was considered. We had a four-year economic plan and the troika accepted that plan. The troika came and went without Irish Water ever having to be established. The troika came and went without water rates having to be introduced. When the troika went home and were safely back in their beds in New York or Europe, Fine Gael introduced its plan for Irish Water.

The memo to which the Minister of State referred mentioned a small organisation - perhaps a bit like the National Roads Authority, with a staff of 25 or 30 - with the work continuing to be done by the local authorities. A referendum was referred to, and this was correct because the model chosen by the Government, in which it took responsibility away from local authorities in order to set up a commercial organisation, is part of an agenda on the part of Fine Gael to ultimately allow water companies from outside to State to control the water supply.

That is just not true.

The Minister of State knows as well as I that, once a commercial water service is available in Ireland, EU competition rules will insist that the market be opened up. We do not have to talk about a referendum or who owns the pipes. The same happened with the supply of electricity. The ESB used to supply electricity but it has been forced, through competition, to divest over 50% of its assets to allow competition into the market. As sure as night follows day, this is what will be attempted with Irish Water but it will never work because it is a failed financial fiasco. It will never get off the ground because of the way the Government has gone about its business. It will never be a valid commercial organisation. EUROSTAT knows this and the Irish Water plan for the next seven years makes no mention of going back to EUROSTAT because it knows it will be laughed out of court. The Department of Finance officials, based on the memos we have read, always knew there would be a problem with EUROSTAT. The Government has tried several things to tweak it, including by means of the provision of the water conservation grant, but people saw through that. It tried to exempt people from water rates to reduce their cost base to get it through EUROSTAT but every little trick it has pulled has failed. Every aspect of Irish Water is a failure.

We did not charge €500.

This will be an issue to debate in the coming election.

To return to this legislation on management fees for local property tax, we just want a partial exemption from the local property tax, in a very modest amount equal to one third of the management fee - where people are paying such a fee - or €300, whichever is the lower. In most cases the amount will be only €86. I am very disappointed the Minister of State is refusing to allow the House to allow the Bill to proceed to Committee Stage.

Question put.

In accordance with Standing Order 117(1A), the division is postponed until immediately after the Order of Business on Tuesday, 3 November 2015.