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Dáil Éireann debate -
Friday, 11 Dec 2015

Vol. 900 No. 3

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

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

The objective of the local property tax introduced in 2012 is to broaden the domestic tax base and to replace some of the revenue from transaction-based taxes with an annual recurring property tax. Our reliance in the past on transaction-based taxes proved to be an unstable source of Government revenue. In contrast, the experience internationally has been that property taxes are a stable and secure source of funding. Stability should be at the core of our public finances now and in the years ahead. Moreover, the local property tax enables us to achieve the goal of stability in a way that does not directly impact on employment. This Government has been resolute in its determination to do all in its power to protect and support the creation of jobs. As a measure which 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 €l million are subject to a higher rate of 0.25% on the excess over €1 million. The local property tax legislation provides appropriately in relation to ability to pay and conforms to international norms. The local property tax is now well established as an important element of our taxation system. It is essential that its position is maintained and, as research, including recent reports I have read from the OECD, and experience internationally consistently show, taxes on immovable property are among the taxes that are least detrimental to growth. We all want to see our economy continue to grow at sustainable levels into the future.

Given its significance, and conscious of the concerns of home owners over increasing property prices and potential effects on their local property tax liabilities, particularly in urban areas, the Minister for Finance asked Dr. Don Thornhill to conduct a review of the operation of the local property tax, LPT. The review focused in particular on any impacts on LPT liabilities due to property price developments over recent years. Dr. Thornhill is well known to Members of this House as a distinguished former public servant who chaired the interdepartmental group on the design of a local property tax in 2012.

I thank Dr. Thornhill, on behalf of many of us, for his work on this report.

In his report on his review of the LPT, which was published on budget day, Dr. Thornhill makes a number of recommendations. His main recommendation is for a revised system whereby a minimum level of LPT revenue 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 LPT 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. The Minister for Finance announced in budget 2016 that he would propose a postponement of the revaluation date for the LPT from 2016 to 2019. The Bill is designed to give a statutory basis to that commitment. The deferral of the revaluation date means that home owners will not be faced with significant increases in their LPT 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.

In addition to the postponement of the revaluation date of residential property for LPT purposes, the Bill will give effect to two of the recommendations in the report, involving LPT relief for properties affected by pyrite, and relief for properties occupied by persons with disabilities. The legislation provides for a relaxation in certain limited circumstances of the requirement for the certification of pyrite damage by a competent person for the purpose of LPT relief. Moreover, in respect of reliefs for properties occupied by persons with disabilities, the changes currently being administered by the Revenue under its care and management provisions will be covered by the legislation, dispensing formally with a requirement that adaptations to property had to have been grant aided by a local authority. It is showing more flexibility regarding how the properties people with disabilities live in interact with the LPT system. Eligibility for LPT exemption for properties occupied by incapacitated persons is being relaxed in order that they will no longer, for example, have to have been the recipient of a court award or an award from the Personal Injuries Assessment Board, PIAB. I will elaborate on these later. Issues relating to the implementation of other recommendations in the Thornhill review report will be a matter for consideration by the incoming Government.

I will outline to the House the main provisions of the legislation. Section 2 concerns a minor technical amendment to section 3 of the principal Act to correct an omission in a cross-reference to the sections contained in Part 2. Section 3 amends section 8 of the principal Act, which relates to an exemption from the charge to local property tax for second-hand properties purchased during the year 2013 and occupied by the purchaser as his or her main residence. The section, as introduced, specifies the period of exemption as the liability dates in the years 2013 to 2015, inclusive, which dates correspond to the years 2013 to 2016, inclusive. The general rule, contained in section 14 of the principal Act, relating to the treatment of properties exempt on a particular valuation date is that they continue to be exempt until the following valuation date. As a result of the retention of the current valuation date of 1 May 2013 for an additional three years, the next valuation date will be 1 November 2019 instead of 1 November 2016. The amendment is required to change the reference in section 8 to 2016 to 2019 in line with the postponement of the next valuation date until 1 November 2019.

Section 4 amends section 9 of the principal Act which relates to an exemption from the charge to local property tax for new properties purchased from a builder in the period from 1 January 2013 to 31 October 2016, which is the date immediately preceding the deferred valuation date of 1 November 2019.

Section 5 amends section 10A of the principal Act, which relates to an exemption from the charge to local property tax for certain properties that have been damaged by pyrite. As recommended by Dr. Thornhill, this exemption is being extended to include some additional scenarios. Up to now, the exemption has been available for properties that have been certified by a competent person such as an engineer as having significant pyrite damage following assessment and measurement in accordance with regulations made by the Minister for the Environment, Community and Local Government. Currently, Revenue is precluded from approving an exemption where a property owner has not obtained the required certificate of damage. Dr. Thornhill recommended that the exemption continue on this basis. However, he considered it should be extended to certain properties that have been shown to have the required level of damage but that have not been certified by a competent person in accordance with the relevant regulations. When the exemption was introduced it was envisaged that all properties that would be accepted into the remediation scheme to be operated by the Pyrite Resolution Board would undergo testing of the underfloor hardcore building material and certification of the level of pyrite damage. However, in some cases, the board is satisfied that the property has the required level of damage without carrying out such testing to verify this. In the absence of testing, the certificate of damage completed by a competent person that is required by Revenue is not available. For this reason, Dr. Thornhill recommended that evidence of acceptance into the remediation scheme be accepted by Revenue in lieu of this certificate.

Dr. Thornhill also considered that properties that are remediated as a result of a successful claim against an insurance company should be exempt. This could happen where builders have insured their properties against structural defects or property owners have insurance policies that provide cover for structural defects. The rationale for this extension of the exemption is that an insurance company would only pay out on foot of a claim for the cost of remediating a property where it was satisfied that the presence of pyrite had caused significant damage to the property. A similar rationale underlies the recommendation that the exemption be extended to those properties that are remediated by the builder or property developer who built the particular property. It was considered that remediation, or the provision of the funds for remediation, would happen only where the builder was satisfied that the presence of pyrite had caused significant damage to a property. While builders may unilaterally volunteer to remediate a damaged property, remediation may also come about following the institution of legal proceedings against a builder or against the person who provided the building material containing the pyrite. The changes are being implemented retrospectively. Thus, in the case of remediation by the Pyrite Resolution Board, the effective date will be the date of acceptance into the remediation scheme. In the case of remediation by insurance companies and builders, the effective date will be when the remediation has been completed and certified or when sufficient funds to carry out the remediation have been provided by the relevant party.

Section 6 amends section 10B of the principal Act, which relates to an exemption for residential properties that are acquired because of their suitability for occupation as a residence by certain severely incapacitated individuals or that are adapted to make them more suitable for this purpose. Eligibility for the exemption depends on an individual being permanently and totally incapacitated, because of a mental or physical infirmity, from being able to maintain himself or herself. When this exemption was introduced, an incapacitated individual was required to have received an award from the PIAB or a court in respect of a personal injury or, alternatively, to be a beneficiary under a trust that was established specifically for the benefit of the individual. However, in practice, there are individuals who are permanently and totally incapacitated to such an extent that they are unable to maintain themselves and whose condition is so severe that it dictates the type of property they can live in and who would be eligible for the exemption were it not for the fact that they have not received the required award or benefited from a public trust fund. For this reason, the Minister for Finance decided in May 2014 to relax these conditions. The exemption no longer depends on the receipt of an award from the PIAB or a court or the establishment of a public trust fund for the disabled individual's benefit. Instead, the nature and extent of the individual's incapacity is established by the submission of relevant information to Revenue. The individual's doctor is required to provide information on the individual's condition and why the particular property or adaptation was considered to be necessary. The Minister for Finance asked Revenue to implement this new procedure on an administrative basis until he had the opportunity to make the necessary legislative amendments, which we are endeavouring to make under the legislation.

The Government agreed to the Minister for Finance's proposal to postpone the next valuation date for local property tax from 2016 to 2019 in line with a recommendation made by Dr. Don Thornhill in his recent review. The valuation date is the date on which property owners are required to establish the market value of their properties. Section 7 amends section 13 of the principal Act to retain the current valuation date of 1 May 2013 for an additional three years up to and including 2019. The Bill provides for the next valuation date to be 1 November 2019 instead of 1 November 2016. This postponement means that property owners will not be faced with significant increases in their local property tax liability in 2017 as a result of increased property values since May 2013. It also allows sufficient time for the other recommendations made by Dr. Thornhill to be considered fully by all political parties and Independent Members and for decisions to be made by the incoming Government.

Section 8 amends section 14 of the principal Act which contains the general rule in relation to the treatment of properties that are exempt on a particular valuation date.

Such properties continue to be exempt until the following valuation date.

Section 9 amends section 15A of the principal Act, which relates to a relief that is available in respect of certain properties adapted to make them more suitable for occupation by a person with a disability. The relief takes the form of a reduction in the chargeable value of a property where the adaptation work has the effect of increasing the chargeable value. A condition for the relief, as introduced, was that the adaptation work had to be grant-aided under one of the local authority schemes available for this purpose. However, as I stated, in practice there are people with a disability who occupy properties that have been adapted to make them more suitable for this purpose but where, for various reasons, the adaptation work was not grant-aided by a local authority. For this reason, the Minister decided in May 2014 to relax this condition and the relief no longer depends on the receipt of a local authority grant. Instead, the nature and extent of the disability is established by the submission of relevant information to the Revenue Commissioners. The disabled person's doctor is required to provide information relating to the disability and why the particular adaptation was considered to make the property more suitable for occupation. At the request of the Minister for Finance, this was implemented on an administrative basis and this Bill will give effect to the procedure in legislation and on a retrospective basis.

In addition to this new procedure, Dr. Don Thornhill recommended a change to the way in which the allowable reduction in the chargeable value of a property is calculated. Currently, the allowable reduction is linked to the maximum grant that would have been payable under the relevant local authority scheme and to the amount of the increase in the chargeable value of a property that is attributable to the adaptation work that was carried out. This is being changed to a reduction of a fixed amount of €50,000, which coincides with the width of the local property tax valuation bands. This change will ensure most people who carry out adaptation work that increases the chargeable value of their property will benefit from a reduction in their local property tax liability of the amount attributable to each one-band increase in value, which is €90. This new method of calculating the allowable reduction in the chargeable value of a property is being implemented with effect from the next liability date of 1 November 2016 with respect to local property tax that will be payable for 2017.

Section 10 amends section 35 of the principal Act, which relates to the submission to the Revenue Commissioners by liable persons of returns relating to residential properties. The information to be included on a return includes, for example, the liable person's assessment of the market value of the property, a claim for an exemption or a deferral of payment and the preferred payment method. In the normal course, a liable person who submits a return relating to a particular valuation date does not have to submit another return until the following valuation date, when the market value of the property has to be reassessed, unless circumstances change in the intervening period. As a result of the retention of the 1 May 2013 valuation date for an additional three years, the number of years for which returns do not have to be submitted is also extended. This amendment provides for an extended period that includes the year 2019.

Section 11 amends section 153 of the principal Act, which contains the list of bodies from whom the Revenue Commissioners may request information. The Revenue Commissioners may only request information that it reasonably requires for the purposes of establishing, maintaining and ensuring the accuracy of its register of residential properties and its administration of the local property tax. The list of such bodies includes, for example, the Local Government Management Agency, the Private Residential Tenancies Board, the Minister for Social Protection and the National Asset Management Agency. Following from other amendments made in the Bill, this amendment adds three new bodies to the list from which information may be requested to verify eligibility for an exemption being claimed by a liable person. The Pyrite Resolution Board may be asked to provide information on properties accepted into its remediation scheme. The Personal Injuries Assessment Board and the Courts Service of Ireland may be asked for information on awards made to certain individuals with disabilities.

In short, the Bill attempts to postpone the revaluation date to 2019 to provide certainty to people, put on a legislative basis the more flexible conditions that have been put in place on an administrative basis since 2014 for people with disabilities and adaptations to their property and how it interacts with the local property tax, and make much sought after and much-needed changes relating to homes affected by pyrite. I commend the Bill to the House.

It is very timely to discuss this Finance (Local Property Tax) (Amendment) (No. 2) Bill 2015 today. There is one good element to its substance, which is the deferring of the revaluation date for the local property tax from 1 November 2016 to 1 November 2019. The issues of exemptions for people affected by pyrite and disabilities are also welcome but they are more of a public relations announcement than a substantive matter if we consider the number of people who have benefited from those exemptions to date.

This debate is timely because we are in December and almost every household in the country will have received a letter from the Revenue Commissioners in the past couple of weeks about paying the local property tax for 2016. It states, "I am writing to you in regard to payment of your local property tax (LPT) for 2016", and the next sentence indicates that the "Finance (Local Property Tax) Act 2012 provides that the local property tax for 2016 is payable on or before 1 January 2016". That is only a couple of weeks away, so our discussion is very timely. We will discuss the people who must pay it rather than the exemptions mentioned by the Minister of State.

On the other side of the letter, the Revenue Commissioners indicate that with people making a single payment, if they pay by debit or credit card, they must make the payment any time but no later than 7 January 2016, which is a few weeks away. For those paying by single debit authority, the payment must be completed online by 7 January 2016, with the Revenue Commissioners deducting the local property tax amount from the current account on 21 March 2016, unless an earlier date is specified. A number of people use the phased payment method. If a person opts for deduction at source from a salary or occupational pension, the first payment for 2016 will be the first pay date in 2016. If a person has it deducted at source from certain social welfare payments, it will be deducted on a phased payment basis, with the first payment in 2016. Where a person has it deducted at source from a Department of Agriculture, Food and the Marine payment, it will be taken from the Department's payment in 2016, which is interesting, as it could come at the end of the year. Some people might get an extra 11 or 12 months interest-free credit with that. People paying by monthly direct debit will see the first payment made on 15 January 2016.

It is timely we are discussing this tax now, as it is due to be paid by most householders in the next couple of weeks. It is fortunate that the Minister of State is here today as an amendment of mine on Committee Stage relates to flooding. Before he leaves the House today, I want the Minister of State to give a commitment in respect of houses currently flooded that they will not have to pay the local property tax for 2016 to 2018, inclusive. The Government has the ability to proffer some gesture from Government funds to these people. We can discuss the detail of the amendment on Committee Stage. The point is very clear. The Taoiseach has said the Minister of State is going to Bandon, Crossmolina, Athlone and Portumna, among other places, in the coming weeks. The Minister of State cannot say that flooding is terrible but people must pay their local property tax at the start of January.

If a Government empathises with its citizens, it could not go down that route and no self-respecting Government will send people to hold hands, stand with them in wellington boots in knee-high water and tell them not to forget to pay the local property tax. It is not on and the Government could not seriously ask people to do it. It will have to take immediate action with the issue and I hope there will be an announcement in the Chamber that there is a little bit of empathy and common sense arising from the hardship and suffering of citizens suffering flooding at the moment. It should be recognised by the Government rather than having it exploit a photo opportunity in boats, with cows stranded in fields and elderly people forced from their houses. We want to see a little follow-through from the Government in the local property tax payment.

We need to see evidence of that here today.

It is also very relevant that the Minister of State, Deputy Harris, is in the Chamber dealing with this Bill. My colleague, Deputy Michael McGrath, submitted a parliamentary question to him on 17 November regarding the amount of money for flood relief works in 2015. The Minister of State indicated that "the total funding allocation, current and capital, for the Office of Public Works [...] overall Flood Risk Management Programme in 2015 is €87.815 [million]" and that this includes expenditure on capital relief works and other items, such as various surveys. He went on to state "the largest element of funding is allocated for the OPW's flood relief capital works activities at €61.284 [million]". He further stated:

Expenditure to 31st October, 2015 on the OPW's overall Flood Risk Management Programme is approximately €35.691 million. There have been unanticipated delays in the progression of some flood relief schemes but the outturn for expenditure in 2015 on the Programme overall is projected to be €73.323 million. The OPW intend to apply to the Department of Public Expenditure and Reform to carry forward an element of the capital saving ...

That capital saving is money that this House voted for him to spend on flood relief works. This is not a saving. It is another example of the public service using a crazy term to describe something. There was no saving, it is just money that was not spent. Money not spent is not money saved-----

-----it is to be spent next year. The Minister of State said in the reply to which I refer that he was allocated money for flood relief works this year and then he said to his senior colleague, "Sorry, Minister, I could not spend it. Can I carry it forward to next year?" What good is that to the people he will be meeting over the next week or two?

The Government led by the Deputy's party did that every year.

What he is saying-----

It is multi-annual funding. You do not understand it.

Before I came down here this morning, a Cheann Comhairle, I checked the record of the funds carried forward last year, the unspent funds from 2014 carried into 2015. It was dealt with by the Minister, Deputy Howlin, or perhaps the Minister of State, at the finance committee earlier this year. There was indeed unspent money in various Departments but not in the OPW. He might have handed back money from current expenditure but there was no carry-forward of unspent money for flood relief work from last year.

We should get back to what is in the Bill now.

I will conclude on this point. The Minister of State is saying €15 million of unspent flood relief money will not be spent this year-----

-----and many households that are being asked to pay local property tax will be subjected to flooding because he did not do his job this year.

That is not true.

That is the essence of what is happening here today. What I am saying in respect of this legislation is that we want a commitment from the Government. That commitment could even take the form of a gesture because the Government is good at gestures. Let it be a token; the Government is good at token efforts.

The Deputy is the most partisan Member of the House.

Deputy Sean Fleming should try to keep himself quiet.

The Minister of State should at least make some effort for the people out there so that they will not have to pay local property tax in the first week of January in respect of houses they will not be able to live in over Christmas. If that is not reasonable, I do not know what is. Is the Government so out of touch with the people regarding the payment of property tax next January that it will ask those whose houses and properties were flooded to pay it? I have an amendment dealing with this issue that is in order but I am covering the main point now. The reason those people's homes and properties are being flooded is that the Government is out of touch. I do not know which radio station I heard the Minister of State speaking on this morning but I was shocked-----

I was not on the radio this morning.

Hold on a minute.

Thank you. Would Deputy Sean Fleming please stick to what is in the Bill? We will not have these conversations across the floor.

We need a local property tax exemption for people whose homes and properties have been flooded. We have an exemption in there for pyrite-----

It is not in the Bill as it stands. We can get to it when the Deputy tables an amendment. We will deal with it at that point.

This is Second Stage. It is about the broad basis of the Bill. In respect of properties that were flooded, I do not know when the Minister of State said it, whether it was today, yesterday or the day before, but it was reported on some radio station this morning that he said this Government is the most proactive ever in the context of dealing with flooding-----

-----and with people whose houses are flooded and who have to pay local property tax. The purpose of this legislation is to deal with local property tax. He said that all the plans can be viewed on the website. The Minister of State is living in a virtual world. He must come out of his website and into reality. Telling people in Portumna and Athlone that they can view his plans on the website will be no good and he cannot be taken seriously.

We are not dealing with flooding. The Deputy should get back to discussing the Bill.

When he has funding to prevent flooding in people's houses, he should actually use it. I will deal with that matter specifically when I move my amendment on Committee Stage. I am not opposing the broad thrust of the legislation because we agree with the extension to 2019 that the Minister of State has included in it. However, we would not need to be here today if he or the Minister for Finance had accepted our amendments to the Finance Bill on exactly this point earlier in the year. This could have been done and dusted but the Government voted down our amendments at that time. I am pleased the Minister is doing a complete U-turn and is coming back to accepting the principle of the amendment we proposed regarding an extension of the revaluation date until 2019. I welcome that belated U-turn and his coming back to support a Fianna Fáil policy that was voted down by the Government earlier this year in the debate on the Finance Bill. The local property tax yield in 2014 was €491 million and the estimate for 2015 is approximately €440 million. Some of the reduction is probably due to the fact that a number of local authorities have reduced the rates in their areas. As we said, the valuation date is 2 May 2013. Most people assume it is being done in good faith. I am not aware of the number of cases in respect of which the Revenue Commissioners have followed up in this regard.

One issue that was mentioned by various people before is the valuation date of 2013. I am concerned that it might lead to a situation where people selling houses will be marketing them as pre-2013 and post-2013. Those that are pre-2013 will have their valuations fixed on that date, while the effective valuation date for those who were lucky enough to be able to purchase a new house post-2013 will be in 2016.

It is important to confirm that the valuation date being extended to 2019 relates to those who had a valuation date of 2013. For people who buy in 2016, the valuation will be fixed until 2019 but the second-hand house market is particularly important. If a house that was valued legitimately and properly in 2013 continues to be owned by the same person, that valuation will hold until 2019. However, if the semi-detached house in the other half of the same building is sold, the new owner will pay the property tax on the increased value. There will be two houses, side by side and part of one structure, but one will have a pre-2013 valuation and the other will have a valuation based on 2016 prices. There is an anomaly there which I will ask the Minister of State to address. Perhaps it can be dealt with, although it is not provided for in this legislation. I do not have a particular amendment on it but it is a point I would like the Minister of State to consider as the debate on the Bill proceeds.

We come to the issue of pyrite. I am a little scathing about the big play made of this and the page and a half of the Minister of State's script dealing with pyrite. We all agree that there should be an exemption for the people whose houses are affected by pyrite. The Minister of State's words indicate he agrees but his actions do not reflect that. I understand that, up to September, only 76 households were excused from local property tax as a result of problems with pyrite. The Minister of State, the Government and the Minister for the Environment, Community and Local Government made a song and dance with regard to an exemption for pyrite and now we find that up to the end of September only 76 households received the benefit of that. It really is making a mountain out of a molehill in terms of publicity. We have a mountain of publicity but a molehill when it comes to the number of houses that are actually excluded from the local property tax.

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

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

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

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

(a) equal to one third of the management fee;

(b) €300; or

(c) equal to one third of the local property tax;

whichever amount is lower.

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

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

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

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

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

Personal taxation depends on jobs and on people working.

Exactly. There is no doubt about it.

There would be no guarantee of that under Sinn Féin's policies.

I welcome the fact there should be taxation on jobs.

Sinn Féin wants to increase taxes.

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

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

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

If the Government does that, then, according to EU rules, the money will have to be taken from public services. Therefore, not alone is the Government destabilising the economy and shifting the stability of the taxation base in doing so, it is also destabilising future public services.

Another issue raised by the Irish Fiscal Advisory Council in the context of stability relates to the fact that mid-term forecasting by the Department of Finance is not accurate. The council said the Department needs to use more accurate tools and highlighted the inaccuracy in the corporation tax estimates. Interestingly, anybody who took an interest in the banking inquiry would be aware that one of the main issues arising was that the forecasts of the Department of Finance were not accurate. Fortunately, a significant level of external factors are blowing behind the country and bringing it to a healthier economic space. These factors include low interest rates, favourable exchange rates, quantitative easing - which is flushing cash through the system - and low oil prices. However, we should not forget that in Bertie Ahern's time as leader of the Government, there were extremely low external interest rates blowing behind the economy and we had little control over those.

What we need to do to create stability is to create a stable, indigenous export sector, which hardly exists here at present. This sector is very small in comparison to those of countries of a similar size. We also need to ensure we have a broad taxation system that focuses on ability to pay. In the 1980s, a school of economic thought existed which suggested that taxation would be better levied based on the ability to pay. The Government has sought to divorce itself from that concept and separates taxation from ability to pay and the reason this Bill is before us is the failure in that regard. When the Government introduced the property tax, it stated that property was a form of wealth and income within a household and, therefore, that it is a reasonable way to focus on the wealth or income of a family. However, the truth is the crash we have experienced has sundered the value of houses and the income or wealth of families. For example, people could face a property tax on a house worth €300,000 but they could owe €400,000 on that property. In that case, the property tax is a tax on their debt, which is incredible.

I know a pensioner in my constituency who worked all her life but who finds things tough. Her heating oil was stolen from her tank during the summer and she had to replace it. In order to be able to afford that, she stopped getting up early and now gets up around noon, thereby saving money by not having breakfast. She has a small lunch and then goes to her daughter's house where she has dinner. She has done this to save enough money to get the oil to heat her house. Despite her low income and circumstances, this woman must pay property tax.

We now face an extreme situation where tens of thousands of people throughout the country are knee-high in water, with farms waterlogged and people in extreme difficulty. Some of these individuals cannot even live in their houses at present.

The Deputy should be asked to stick to the Bill.

They are likely to have to eat their Christmas dinner elsewhere. Members of the Government will stand in the photographs highlighting this disaster while the people to whom I refer will still be expected to pay their property tax. That is cynical.

I find this Bill cynical because it represents an admission that the value of a house no longer represents the wealth of a family. A recent study has shown that if house prices continue to rise, the average rate of property tax will increase by €189 per family.

Debate adjourned.