I welcome the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty, back to the House. She is always very welcome.
Local Property Tax: Motion
That Seanad Éireann:
- the Local Property Tax (LPT) was introduced in 2013 and current valuations are from that year;
- the primary purpose of LPT is to provide funding for local services;
- Fine Gael wrongly diverted 30 per cent of the revenue in 2014 to Irish Water;
- initially the revaluation date was set for November 2016, this was changed to November 2019, prior to the last General Election;
- Fianna Fáil consistently called for the postponement of the November 2016 revaluation so that significant reform could take place and people would not face large and unaffordable increases in their LPT bill;
- Fianna Fáil has consistently stated that LPT bills should not be increased as a result of the 2019 revaluation and that ability to pay and affordable issues need to be tackled;
- with the very significant increase in property prices since 2013, if left unreformed, people will face major increases in their LPT bill in 2020;
- LPT brought in €477 million in 2017 and this provides vital funding for local services;
- the revenue from LPT should remain broadly stable as a result of 2019 revaluations as home owners will not be able to afford to pay if a significant increase arises;
and calls on the Government to:
- undertake significant reform of the LPT system before revaluations take place in November 2019;
- ensure that households do not receive substantial increases in their LPT bill in 2020;
- ensure that households do not receive substantial increases in LPT bills in 2020 that would arise in the absence of significant reforms to the LPT system;
- examine the possibility of extending some relief from the LPT for those in multi-unit developments paying significant management charges; and
- introduce measures that would deal with ability to pay and affordability issues.
I thank Members for the opportunity to address this important issue. I welcome the Minister to the House. She and I dealt with another issue in the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach yesterday.
The local property tax, LPT, is a very important issue. The motion proposes that Seanad Éireann recognises that the tax was introduced in 2013, that current valuations are from that year and that the primary purpose of the LPT should be to provide funding for local services. It notes that in 2014, the previous Government wrongly diverted 30% of revenue from the tax to Irish Water. Initially, the revaluation date was set for November 2016 but the date was changed to November 2019 prior to the general election. The Fianna Fáil Party consistently called for the postponement of the November 2016 revaluation in order that significant reform of the tax could be implemented and people would not face large and unaffordable increases in their local property tax bills. My party has consistently stated that LPT bills should not be increased as a result of the 2019 revaluation and that ability to pay and affordability issues need to be tackled.
Given the significant increase in property prices since 2013, people will face major increases in their local property tax bill in 2020 if the tax is left unreformed. The LPT generated €477 million in revenue in 2017 and the motion acknowledges that this income provides funding for local services. It calls for the revenue from the LPT to remain broadly stable as a result of 2019 revaluations, whether through a reduction in the multiplier or by another means.
The motion calls on the Government to undertake significant reform of the local property tax system before revaluations take place in November 2019 to ensure households do not receive substantial increases in their LPT bill in 2020 that would arise in the absence of significant reforms to the LPT system. It also calls for an examination of the possibility of extending some relief from the tax to householders in multi-unit developments who pay significant management charges that are separate from the local property tax bills and cover services that most other people receive by virtue of paying the local property tax.
I note Fine Gael has tabled an amendment that basically deletes our entire motion and replaces it with some kind of self-congratulatory motion about the wonders of LPT. I have no doubt Senator Paddy Burke or somebody else will have to try to defend that as best he can. We are debating the local property tax. The household charge was originally called "funding local services". However, half the time it is funding local services somewhere else. In many cases the money is not staying in the local authorities. Dún Laoghaire-Rathdown County Council, of which I used to be a member, generates more property tax than the whole of Connacht. I accept that property values are different but it is a local authority area that is five miles wide and eight miles long and generates a huge amount of property tax.
I will go through some of the statistics. Just because the value of the house is larger, it does not make people automatically better off. It often means they have a far greater mortgage against that house and equally that their monthly disposable income is quite different. Based on the revenue returns based on the property values in 2013, which is the last time valuations were declared other than for new houses that have been bought since then, 60.6% of houses in Leitrim are valued at less than €100,000. In Dún Laoghaire-Rathdown County Council, that figure is 1.3%. In almost every local authority bar four, less than 10% of the houses are valued at over €300,000, but in South Dublin County Council it is 19.3%; in Wicklow it is 15.1%; in Dublin city it is 19.7%; and in Dún Laoghaire-Rathdown it is 59.1%.
That does not mean everybody in Dún Laoghaire-Rathdown is very wealthy; it just means the price of property is much higher and people have much greater mortgages. It is not fair that they are paying huge amounts of money into a fund. In some cases the amount that is going to the equalisation fund, the 20% of that money, is greater than other local authorities are generating in their entirety.
We need to look at something other than just pure property valuation. We need to look at the services provided. I fully acknowledge that services in Dublin, such as public transport, lighting and libraries, are often better than in other parts of the country. Equally we must acknowledge that the people living there have paid enormous amounts of money for their houses and often have paid huge amounts of stamp duty at the time when the stamp duty rates went up to 9% and so on. They have paid a huge amount of money to live where they are living. At a recent meeting of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, I pointed out that a teacher down the country and a teacher in Dublin are paid the same amount, but the disposable income of one is very different from the disposable income of the other.
We should look at other measures than just pure valuation. Local services form part of it. One could use floor area, the number of rooms and so on. I am not advocating a bedroom tax or one of those kinds of things, but there must be more nuanced ways than just pure value. Value is easy, but many people have paid huge amounts of money for those houses and have huge mortgages. They need the process to be fairer to them.
It is not fair, for example, in Dún Laoghaire-Rathdown for a €1,000 charge, even after the 15% cut which brings it back to €850, that €200 of that €850 goes to the equalisation fund and €600 of that €850 replaces grants that were given by the Department in the old days for roads, housing and other things. The local authority, having collected a net €850, down from the original €1,000, is only €50 better off. A householder has paid €850, down from €1,000, and gets €50 extra into their local authority.
If I were in government and the Minister of State were in opposition, he would be giving out about that system, certainly if he represented a constituency where so many houses are valued in the top band of over €300,000. That is all the information we have. We do not have any further figures. I believe there are 20 bands, but Revenue will only give us figures for the bands up to €100,000; from €100,000 to €150,000 as far as €300,000; and then the figures for over €300,000. I accept that in almost all those local authorities over €300,000 is small. However, there must be a better way to do it.
I do not advocate higher property tax for the rest of the country. However, we must acknowledge that significant parts of Dublin are generating a lot of property tax and are not necessarily getting the services commensurate with that. Every local authority, bar the four Dublin local authorities, gets road funds in addition to their property tax from the Department. The property tax is supposed to fund the roads tax in Dublin, so there is no allocation for roads either.
The funding of local services is important. Funds were diverted from the property tax to Irish Water when clearly the local authority no longer directly provide that service, albeit there are service level agreements involving them. We need to look at LPT. The new valuation date is coming soon. We are highlighting it today as an issue. The most important thing is that householders do not experience a doubling or more of their property tax. I am sure the Minister of State also does not want to see that. Of course Ministers for Finance always want to raise more revenue, but that has to be found from somewhere.
I do not believe we should have a system based purely on value, not taking into account the mortgage and other figures, and not looking at services being provided. It will always be more efficient to run a largely urban local authority because of the number of people using a road, footpath, library or whatever. Of course, we want to ensure that every local authority is resourced properly. However, we should not ask householders in one local authority to transfer a big amount of money into a pot that is then used by other local authorities. That is what central government is for. The local property tax is supposed to be just that - a local property tax used locally. The amount of money some local authorities are putting into the equalisation fund is greater than the entire amount of property tax generated in many local authorities. That is not a fair system.
Our motion is reasonable. We are not asking the Government to abolish the local property tax; we are not asking it to halve it or freeze it. We are asking the Government to carry out a review to examine what we are doing and ensure people do not face massive increases in their property tax at the time of next year's revaluation. I think that is reasonable and measured. Fianna Fáil is working with the Government by facilitating its existence. We want a fairer property tax that does not penalise people who happen to live in Dublin. In many cases they are here because of employment prospects and so on. Their property prices are high because those properties are in demand, but that does not automatically make those people very rich. It is important for us to examine that figure and ensure the property tax is there for services to be funded properly.
I propose to share time with Senator Ardagh.
Is that agreed? Agreed.
I second the motion. I agree wholeheartedly with everything Senator Horkan said. As the Minister of State comes from an agricultural background, I am sure he will concur with this. There is a saying in our industry about people being asset rich, but yet living on the breadline. A farmer can have a farm that is worth a lot of money, but if it is their home, they cannot realise any income from that. While they can be asset rich and end up with a large property tax, which will be even larger after the revaluation in 2019, it does not necessarily mean they have the ability to pay. This must be taken into consideration and should have been from the outset.
As Senator Horkan has said, we are not looking for abolition or any major change. We are looking for address of the system of how property tax is administered after the review. While Senator Horkan concentrated on Dublin, property prices all over the country have risen. For people, who were in negative equity whose personal circumstances may have changed during the crash and experienced periods of unemployment or may still be unemployed, there is no consideration as to whether they can pay, irrespective of the value of the house in which they live. They may have a very large mortgage or may be in negative equity. They may have inherited a house that is worth a lot of money and valuable when it comes to taxation purposes but it does not realise any income to them. It is a roof they need over their head. People will not sell a house and downsize just for the purposes of property tax and it may not be feasible for them. They may not be able to move from the area in which they live and there can be many different circumstances that hinder that happening.
The motion asks the Government to look at the system.
Senator Horkan did not mention one thing that I think is a valuable argument for this motion. I refer to the property tax of landlords, whether they are incidental or professional. When they get hit with the extra property tax, it will be filtered down to their tenants. It will be paid, in essence, by a sector we are all defending daily because of the crippling effect of rent. This can only have one outcome. The property owner will not pay the extra property tax. They will pass on their increased bills, and that will hit a sector of the community that is already crippled. It includes the student rental sector and student rents that we discussed recently. It needs to looked at, distributed more evenly and applied to people who can afford to pay. That is the key point of my input today.
We must look at the ability to pay because the value of a property has no bearing on income or the ability to pay the bill when it comes. Escalating property prices mean the bills are only going to go one way. The Bill was well buttered up when it was introduced initially. People in rural areas bought into it and thought it was a great idea. They believed it would provide street lighting and footpaths outside their houses. The selling point was that all income from the tax would be spent locally; instead, it was redistributed in many instances to other areas. There was no additional income to the local authority because central government deducted its payment to the local authorities by almost an equivalent amount.
Is the Senator sharing time?
Yes, I will hand over now. The key point is that there must be some recognition of ability to pay any bill or tax.
As my colleagues have pointed out, the essence of the motion is that local property tax bills will not increase when properties are revalued in 2020, with revaluation due in 2020 as matters stand. Many people are asset rich and cash poor. We have seen increases of up to 100% in house prices, especially in the cities. I work as a solicitor and in cases where the value of a house has increased by 80% or less, the buyer may obtain what is known as general clearance for local property tax purposes. However, specific clearance is needed if the value of a property increases by more than 80%. If that cannot be obtained, the owner must pay the difference between the local property tax paid in 2013 and the LPT that would have arisen if the valuation had been correct in 2013. We have already seen many difficulties in the LPT system and it is beginning to come apart. We know the mechanisms for organising the LPT system must be reviewed.
Many properties at the moment, especially new builds, are not in the LPT system. We can understand that a revaluation or new system must put in place. The motion calls on the Government to ensure that those who pay LPT now do not face increases in their local property tax. As my colleagues pointed out, the value of properties in Dublin has increased by 100% in some cases. This does not give any benefit to many people because they will not move from the homes in which they have lived for past decade and will probably live in for another two decades. Their houses have increased in value but there has been no corresponding increase in their incomes. They cannot afford to pay the substantial increases that may be coming down the line.
It would be very unfair to use this current system and revalue properties at a future 2020 rate. This motion calls on the Government to ensure a fair system is in place and the issues of affordability and ability to pay are examined. The local property tax disproportionately affects people living in Dublin where we have seen the most extreme increase in house prices. We have not seen increases of 100% anywhere other than Dublin. If the revaluation takes place in 2020, as envisaged, Dublin householders will be negatively impacted. This motion calls on the Government to ensure that a fairer system is put in place and to promise that no increase in local property tax will affect householders nationwide. As it stands, an increase in LPT would most affect people who own homes in Dublin. I thank the Minister of State for coming to this House. I hope he will support our motion and I look forward to hearing his response.
I welcome the Minister of State to the House. I thank Senator Horkan and the Fianna Fáil Senators for putting this motion forward. It is a good motion. It allows debate to take place on this issue on which an ongoing review will be completed later this year. It is a good motion in the sense-----
Is the Senator moving an amendment?
I move amendment No. 1:
To delete all words after “That Seanad Éireann:” and substitute the following:
- the objective of the Local Property Tax (LPT) is to broaden the tax base and replace some of the revenue from transaction based taxes with an annual recurring property tax to provide a stable and secure source of funding for local authorities;
- this stable source of funding has yielded over €470 million in 2017 to support the activities of local authorities throughout the State;
- the LPT is fair and equitable as the owners of the most valuable properties pay the most;
- the LPT legislation provides appropriately in relation to ability to pay and conforms to international norms;
- the LPT is now well established as a significant element of our taxation system and acknowledges that extensive research and experience internationally shows that taxes on immovable property are among the taxes that are consistently recognised as being the least detrimental to growth and employment;
- the Finance (Local Property Tax) (Amendment) Act 2015 provided inter alia for the postponement of the revaluation date for the LPT from 1 November 2016 to 1 November 2019, ensuring that home owners were protected from significant increases in their LPT liabilities in 2017, 2018 and 2019 as property values increased;
- the Minister for Finance has initiated a significant and important review of the operation of the LPT focusing in particular on the impact on LPT liabilities of property price developments since the initial valuation date of 1 May 2013;
- a public consultation has been conducted as part of the review;
- the current review of the LPT includes an examination of the outstanding recommendations of the 2015 Thornhill review of the LPT and will inform the Minister for Finance in relation to any actions he may recommend to Government concerning the overall yield from the LPT, its contribution to total tax revenue and the optimum way of achieving that objective;
and calls on the Government to complete the current review of the LPT and bring forward proposals in due course designed inter alia to ensure that taxpayers LPT liabilities in respect of 2020 remain affordable and sustainable.”
I thank the Senator.
That deletes our motion.
It is a very good motion.
I congratulate the Fianna Fáil Senators on tabling the motion.
The Senator is proposing to delete the motion.
He should have gone the whole hog and abolished it.
He is being reasonable for now.
I congratulate Senator Norris as well on winning "home of the year". He should not be penalised for-----
We do our best not to-----
I will be penalised, however.
The Senator should not be.
I will be.
He has a fantastic home.
The motion raises many issues. I hope the review of the local property tax will take account of some of the issues raised. My colleague from Mayo, Senator Michelle Mulherin, has raised this issue on many occasions at our parliamentary party meetings and in the House. She proposed a system where the starting point would be the rate at which the local property tax was set initially. It would then increase on a three year aggregate in line with inflation and a cap would apply. However, when the legislation was brought forward first there was no provision for a cap. There should be a cap.
The Revenue Commissioners have enormous power in respect of the property tax. I believe it is the first time the Revenue can enter a home and take control if the householder is not in compliance with the law. The law provides that householders must estimate the value of their property. As we know, various scenarios can inflate prices or, if there is not enough competition, the price achieved for a property may not be what was expected. I saw a house sold recently where no bids were made. How would a value be placed on a house like that? In another case where a few people wanted to buy a house, the price was greatly inflated. Does that mean that the value of every other house in the area in question should be inflated as well?
That is where I believe there are inadequacies in the legislation. I raised this issue at a recent parliamentary party meeting with the Minister for Finance, Deputy Paschal Donohoe. He indicated he hoped the review, once completed, would deliver a fair and affordable system. I hope that will the case and that people will not be criminalised for putting a wrong value on their home. It is very hard for an ordinary individual to put a value on their property. How do they do that? People do not know what the value of their house is unless they put it on the market. That is when the real value of a property becomes known.
Or one can pay a couple of thousand euro for a valuation.
That is correct. I hope people will not be criminalised when new legislation is introduced, if it is required after the review has been completed. I propose the amendment to the Fianna Fáil motion, although I have great sympathy for parts of it.
I believe most people would agree with a lot of what is in the motion and there are also many aspects of the amendment that Fianna Fáil would agree with. Perhaps Senator Horkan would withdraw the motion until the review is carried out later this year.
There might be a meeting of minds.
I ask Senator Horkan to consider withdrawing the motion.
I hope those who carry out the review will take into account the many issues that have been raised in the House in regard to the local property tax. Later in the year, I hope we will see that the proposals made here today are addressed in that review, and that, as the Minister has said, it will be fair.
Senator Paddy Burke might consider withdrawing his amendment.
I welcome the Minister of State to the House. I have had the benefit of reading his transcript, which is very interesting. It is something we do not always have the benefit of before the Minister speaks.
I did not have the benefit of that.
I welcome that 12 Fianna Fáil Senators have signed the motion. While I would not agree with all of it, it is a good motion and it is good we are having this debate. The current local property tax regime is exorbitant in certain places, and in certain circumstances it is grossly unfair and takes no account of people's capacity and ability to pay. At the same time, we need a form of support for local government. I have always advocated a council tax and I stand here today in a public forum and I say it again - we need a proper revenue stream for local government. I believe we need to be upfront and honest and we need to learn from other experiences in this regard. Part of the remit of the Minister of State, Deputy Phelan, is local government and I know he is working on a number of initiatives. If we want decent local government, we have got to finally address the real issue of how we fund local government. It is wholly inappropriate that it should rely as heavily as it does on the commercial sector and commercial rates.
I believe people are happy to pay or make a contribution-----
No, they are not.
-----for decent local government services. It has nothing to do with the value of their properties, which I think is totally wrong. While I do not subscribe to the current system of local property tax, I believe we should work to demonstrate to people that the revenue collected locally will be retained locally, every penny of it. I believe this is where people have a problem.
Those who support the Government need to use their influence to prevent any hike in property tax bills, and I say this to Fianna Fáil Members in particular, given they are supporting this Government, whether they like it or not.
We are facilitating it.
They are facilitating it. However, they can crank up their influence and their currency with this current Government. We know we will have local elections in 2019. I can tell the House here and now that local property tax will be one of the biggest issues facing the electorate in June 2019. If Fianna Fáil does not make an issue of it, somebody else will. I certainly will be doing so. I look forward to being out either canvassing or campaigning in some way in that election. It is one of two or three issues that I feel strongly about. We need to address it. I get a feeling that Fine Gael and the Government will address the local property tax because they are pragmatists, or they would want to be if they want to survive in the forthcoming local elections, which are just a year away.
It is important that we address the issue and that we have fairness in the system. We should be under no illusion that it is a big issue that is exercising the minds of people when they are out and about. Councils contribute to local communities and facilities. Many people were sold this big deal that they were going to have swimming pools, libraries and other services but it did not happen. I believe we need to link it in to the services that are provided locally, and with full accountability. We have to seek, as part of any local government review, better value and accountability for services, and greater transparency in the funding of local government and how that money is spent by local councils. I support empowering councillors and giving more powers to local government. While I do not hear too many people talk about it in central government, I am in favour of devolving more powers to local government. With that, however, there has to be funding from the Government. If people see a system where they can have some sort of a contribution, I believe they would be interested in supporting it.
I thank Fianna Fáil. I support 99% of what it is saying in this regard and I think it is right. We need to be honest and we need to pull away from the current system of local property tax. It is not the right way to do business. If Revenue was not collecting it, half of it would never have been collected. We need to look at this. It is part of a bigger reform package for local government and how we fund local services.
I am in two minds as to whether to support the Fianna Fáil motion. I probably will because it is half a loaf and that is better than nothing. However, if it was really the republican party it claims to be, it would go for total abolition of the local property tax.
It astonishes me there was such a row about the water rates. There is a very clear argument from central Government for water rates and for the establishment of Irish Water. Water does not come straight from a cloud into a tap; it has to be stored, treated and delivered, and these are all clear costs. However, if I look at the history of Ireland - if I look at figures like James Fintan Lalor, Gavan Duffy and Parnell - they all fought against this kind of thing because it is nothing other than rack-renting. Under the 19th century system, if an Irish citizen dared to improve their property, the rent went up. That is one hell of a disincentive.
I will talk from my own personal experience. Luckily, I can still afford to live in the house to which gracious reference was made, and which won celebrity home of the year. Let me say that this took 40 years to achieve and hundreds of thousands, possibly millions, of my income were spent on that, because it was my only hobby. It is one of the ideals of this city to preserve the Georgian architecture. While the city authorities were laying waste to Georgian buildings all over Dublin, in my own little way in North Great George's Street, through my own house, through the James Joyce Centre, through the 12 other houses with which I was positively involved and through the creation of the North Great George's Street Preservation Society, I was doing the job of these people. What is the reward? To have a tax slapped on, just like in the 19th century.
We are told the primary purpose of local property tax is to provide funding for local services. What local services? Perhaps the Minister of State can explain what local services we get. We pay for the roads through car tax, which is also totally idiotic. I drive a very old car and it costs me as much every year to tax and insure it as it did for me to buy it because the Government will not see the sense of the polluter pays principle. The Minister in charge in a previous Parliament agreed with me that the polluter pays principle was the way to go, and one would pay the tax on the petrol. That is the obvious way to go but they will not do it. Therefore, the roads are provided for through road tax and, with regard to other services, we used to get the bins collected by the corporation. They were reasonably well collected and people knew where they were, and they were all collected at the same time, not in the middle of the night by half a dozen fly-by-night companies, which, by the way, engaged quite recently in the Mafia tactics of burning out each other's lorries. We do not really know where the profits go from these companies. That was a great one. How about taxing their profits? To repeat, we are not paying for the roads as that is done through car tax, and we pay through the nose for our bins. Therefore, what do we get for it? Very little.
The Fianna Fáil motion states: "Fine Gael wrongly diverted 30 per cent of the revenue in 2014 to Irish Water". Therefore, we are paying our property tax to prop up Irish Water. Hello. Is anybody out there listening? I am not sure.
We come to the Government's amendment. My really decent and lovable friend, Senator Paddy Burke, said it was a great motion but then went and deleted the whole bloody thing. Oh God, Mother Ireland you are rearing them yet.
The motion states that the objective of the local property tax is to broaden the tax base and replace some of the revenue from transaction-based taxes with an annual recurring property tax to provide a stable and secure source of income for local authorities. They are scraping around to see where they can get the money to fund local resources. Had the Government the wit to tax the vulture funds, it would have the money. Giving the vulture funds charitable status was a brilliant coup. Nobody could possibly have anticipated that. If people were dreaming up what they could do that would be the most ludicrous thing possible, giving charitable status to vulture funds or, as I call them, vampire funds would be one. The motion has the gall to say that the LPT is fair and equitable as the owners of the most valuable properties pay the most. What about income?
I restored my house and spent huge amounts of money on it and I am very glad I did. Meanwhile, my income from Seanad Éireann has gone down by 50%. It is half of what it was before the crash because we had the cuts that everybody got, which is fair enough. Uniquely to us, the long service increment was ended. Being in Seanad Éireann is the only job in which one gets no long service increment whatsoever. That was a bright idea, which would save the country thousands of millions and billions. The money involved was a few grand that was given to half a dozen people in either House. It was a lot of rubbish and cosmetic nonsense.
The Civil Service was cute about hedging around the small and large allowances we got. Charlie McCreevy gave very generous allowances for nothing at all. Nobody knew what they were for. They were to compensate us for not taking his series of wage agreements. There was cash into one's hand. The same bloody civil servants had payments streamed into their income. They are not subject to the same thing. After 32 years and half a dozen elections, I earn exactly the same as someone who was nominated without an election and hardly shows a face in the House. The phrase used was "fair and equitable".
A review was conducted by Dr. Don Thornhill, whom I never met and never heard of. He was involved in the design of the tax. It is wonderfully independent and marvellous that the Government got the man who designed the tax to review it. Of course he is going to say that he thinks it is wonderful and it was a clever idea and he will wonder who thought of it. Has the Government ever heard of such a thing as independence? It certainly does not jump out at me from the speech.
The people want the property tax to be abolished as it is grossly unfair and harks back to a situation of rack-renting. We are talking about property tax when so many people cannot afford a home for financial reasons. We should ensure everybody in the State can afford a home in which they can be comfortable. I salute Sinn Féin for its stand against property tax. That is the way forward and an election winner. If Sinn Féin is going to go into coalition with Fine Gael or Fianna Fáil, it should make that a condition.
This motion is a typical cynical motion from Fianna Fáil but to be fair, it is only taking up Fine Gael's lead on it. Those parties which supported the local property tax are now running afraid of it. Of course it is due to increase. The whole idea when it was introduced was that as property prices went up so too would the tax. That was too much to accept before the election so the can had to be kicked down the road. Now the great proposal is to kick it down the road again to make the next increase even steeper.
The Government should stand over the logic of its tax. I read the Minister of State's speech. It states the introduction of the local property tax provided an opportunity for political reform at local level. It has not done what it was supposed to do. I came from and live in a local authority. Local authorities are starved of finance. Not only that, decision-making within local authorities is still centralised in central government and at a European level and chief executives within the council make decisions. It certainly has not given more decision-making to elected representatives. The Government has not delivered the type of reform which was intended. People still do not have water, sewerage, proper roads and all of those things. People are annoyed because they do not see any benefit from the tax.
The local property tax was introduced at the lowest point in the property cycle, making the increases inevitable. Even those currently excluded because they bought properties in 2013 can only buy a little more time. There are people in deep mortgage distress paying this so-called wealth tax. For them it is simply a tax on debt. Throughout his speech, the Minister of State referred to the importance of stability. Where is the stability for people who are paying a tax on debt?
I note the calls for reform, but what did these parties think was going to happen when they linked the tax to property? The motion is deliberately vague and designed to give the impression that something is being done. I have no idea what ability to pay and affordability issues are, and I do not know if anybody else does. In its report, the Parliamentary Budget Office set out four choices: no policy change, that is, the 2019 revaluation would go ahead as planned; to freeze valuations at 2013 levels; to revalue and adjust rates nationally to maintain overall yield; and to revalue and adjust rates locally to maintain overall yield. The Thornhill review supports the last option. As Senator Norris points out, we cannot have somebody reviewing a tax when he designed it in the first place.
One of the options is to revalue and adjust rates locally to maintain the overall yield. Maybe this is what Fianna Fáil is getting at but that would require some householders to pay more to allow others to pay less. Is that what this motion is about? If it is the case, Fianna Fáil needs to be honest about it. For Sinn Féin there is a fifth option, and a fair option, namely, scrap the local property tax-----
-----and replace it with Exchequer funding. As Senator Norris and Sinn Féin have said, giving charitable status to vulture funds, who end up owning many properties and land when loans go into distress, and allowing them to pay a minuscule amount of tax does not make sense.
Is the correct title equity houses?
They are equity houses.
I asked a question. It is not their correct title.
Vampire funds is what they are.
I know Senator Norris is-----
They are vulture funds which are facilitated by this Government-----
Is the Leas-Chathaoirleach on any of the boards?
They have made fortunes on the backs of vulnerable citizens, many of whom have been crippled by property tax. They have had the red carpet rolled out for them. They are the same vulture funds which refuse to come before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. Why will they not do that? What do they have to hide? We reward them by letting them avail of these tax loopholes.
It is crazy. We have shown how the local property tax can be abolished. We have included it in all our fully-costed alternative budgets. This amounted to €445 million in the planned 2018 budget. It can be done. We have shown how. It is a failed tax. Its supporters are trying to reform it so that it is no longer what it was meant to be. The allocation process is so skewed that one cannot really call it a local tax - and it is not a local tax - and now the two main parties do not want it to be a property tax. It is merely another tax being levied regressively, including on those who cannot afford it and those who are already struggling under mountains of debt.
Sinn Féin continues to call for this tax on this debt to be abolished and have demonstrated how this can be done. I ask the Minister of State to reconsider this. It is often the case that the little people are taxed, those who cannot move or shift things around and cannot escape it. I ask that the Government look again at alternatives to the property tax in this year's budget, and consider how it might be scrapped altogether. I ask the Government that it should please not use the excuse of local government reform. Local government is starved of funds but this matter is in no way connected to local government reform.
I second the Fine Gael amendment. It is interesting to listen to the debate. I am always concerned when Fianna Fáil talks about property tax and what it might or might not do. This seems to be the start of a debate relating to a future election promise in which Fianna Fáil will remove property tax. We all know what it did in 1977 when local authorities were funded by rates from households, businesses and landowners. Fianna Fáil removed that from household properties so that it could win a general election. Not alone did it win the general election, but it led the country to rack and ruin. This is another promise that it will deliver on in the next general election. Some €470 million will be cast aside, it will have to be found somewhere else to replace the property tax -----
The Senator should read the motion.
I have no doubt but that this attempt to remove it will be before the electorate before the next election. As for Sinn Féin, it is talking about removing the property tax down here when someone in Newry has to pay two property taxes, one a local tax and the other a district tax, which it increases on a regular basis.
I wish to make a correction ----
Sinn Féin down here shouts for the removal of the property tax -----
The Senator knows that services are delivered. He should also understand -----
-----and then in Northern Ireland, call for it to be increased. I do not know what to make of that.
I have to take a point of order. I think that it is a point of order.
The Senator is telling mistruths.
They are facts.
There is no point of order.
They are facts. The Senator cannot deal with facts. She should deal with the truth.
There are alternatives.
I supported the last Government which introduced the property tax. It was there to broaden the tax base which had been decimated by the previous Fianna Fáil Administration when everything was based around taxes associated with building houses, and for developers. That property tax was difficult to bring in and was introduced reluctantly.
What are we to do for the future? Three parts of the tax are moveable. One is the property valuation, last undertaken in 2013 by all those who owned property. The second is the local adjustment factor, introduced in a recent Bill, where local authorities could adjust the property tax on each individual property by 15%. For instance, in 2017 Longford reduced the property tax by 3% and in 2018 increased it by 10%. In 2017, Limerick increased the rate by 10% and then by 7.5% in 2018. Most Dublin local authorities reduced it by 15% because of changes in the value of properties.
The third is the standard rate which is 0.18% while properties worth over €1 million, which might include Senator Norris, are at 0.25%.
I have no control over it. That is the point. Houses go up in value.
The thing that can be done for the future was what was done in the mid-19th century when Griffith's valuation was undertaken. That valuation applied until recently when there was a review of all commercial properties. Local authorities decided on what they would charge in the pound. In their own general meetings, they decided whether to raise or lower the rate. That is what should be done. We should leave the valuation as it is and let the local authorities decide if they want to increase it by either the adjustment factor or else we as legislators should allow them to move the standard rate up from the 0.18%.
How about providing some services?
I agree with Senator Norris on services. In my own local area, a number of playgrounds have been built from local property tax receipts, and roads that would not normally have been done have been done through the local property tax.
Streetlighting has been paid for and footpaths repaired. Grants have been given to local communities for festivals and doing up their estates. All these things have been done through the local property tax.
The Government should leave the valuations as they are. If local authorities want to increase their revenue they should examine doing so on the local adjustment factor or give them the power to increase the standard rate. However, it should be put back to local authorities because that is where the money will be spent and local councillors should be given this power, not central government.
I will make one final point. Some 62,000 properties have been built since 2013 which are exempt from property tax which would have been worth €61 million to the State. We might include this in the review. It might be that the valuation should be brought back to those properties to 2013 levels, as with similar houses in the area.
Those are some of my ideas. I am strangely surprised by Sinn Féin with its call for abolition when it has it in full force in the North of Ireland where it is in charge. As for Fianna Fáil, this may be a step towards the abolition of the tax and the ruination of this country once again.
All the Prods have all the houses, it is a nationalist plot.
Order please. I call Senator Gerard Craughwell.
The Minister of State is getting something of a lashing on this property tax issue.
Actually, he is not.
I believe that in his speech today, he will announce the living in Dublin allowance and then we will not care about property tax, we will be very happy to pay it.
I do not know what people were thinking of when they based the tax on the value of properties. A four-bedroom, semi-detached house in Leopardstown in Dublin had a value of €969,000 before the crash. Immediately after the crash, it had a value of €360,000. If I live in that house, on which value should I pay the tax? Where does the valuation come in there? What lunatic put the value of the property as the basis for tax? I cannot really support the Fianna Fáil motion and am inclined to go along with Senator Norris and say let us just scrap the tax. It is coming to the stage where a living in Dublin allowance needs to be introduced for public servants, gardaí and teachers, who are on fixed incomes.
As Senator Norris pointed out, not only is one being hit with property tax one is also paying for the bin service. We rarely see the grass being cut in housing estates now even though we pay for it. When we were not paying for it directly through property tax it was being cut once a month. Now it is rarely done, perhaps once every six weeks or the like. The financial emergency measures in the public interest, FEMPI, legislation is still in place. Senator Norris referred to the removal of the long service increment, which sadly I would not qualify for if it was available. The Government has taken a significant amount of money from public servants over the last number of years. It has started to give some of it back, but we are a very long way from where we were in 2008.
Property tax is going up because the value of property is going up again. The four-bedroom, semi-detached house I referred to that dropped to €360,000 is now priced at €700,000. Yes, the economy is booming. The last Government did a great job on the backs of the citizens of the State. The country recovered. That recovery facilitated the vulture funds mentioned by Senators Norris and Conway-Walsh. They are enjoying all the benefits, but the workers are still paying and paying hard.
As regards the current system of property tax, I understand that Fine Gael has asked Fianna Fáil to agree to continue the little relationship so the Government can survive for another two years. If Fianna Fáil is happy to continue with the love affair it will all be hunky-dory for a while, but Fianna Fáil could make it part of the deal for the love affair that it has some input into property tax. That would be a good way to start. Senator Boyhan said that this will be an election issue. There are so many things that will be election issues I would not wish to go near an election at present. Property tax, health, education and security are among them.
Who wrote the Government's amendment? Who wrote that the local property tax is fair and equitable? Were they trying to pull a fast one? It is hilarious to say it is fair and equitable. My poor old semi-detached house, indeed my dog's kennel, has a higher property tax rating than some of my relations' houses down the country. When the Minister of State does the review he should just scrap the property tax and bring forward something more equitable.
Putting the money into water is a cheat. We had all the marches in the streets and then the Government said it was withdrawing water charges. It decided to divert some of the money from property tax. Given the rate at which properties are going up in value it will catch up on the €1 billion it was going to collect anyway. That really has to stop. The Government has no idea how difficult it is for ordinary, hardworking people to live, particularly public servants who are on fixed incomes and anybody working in the private sector who is on a fixed income. Property prices are going through the roof. Where are people going to get the money? I got notice recently that my waste charges are about to go up. There is talk of introducing charges for green bins. Everything is going up continuously but my income has not changed very much, and I doubt that I will see much of a change in my lifetime. Certainly in my working lifetime I will not see much change.
This tax was a fudge when it was introduced. It was just another way of making money, as was the FEMPI legislation. It was introduced with the most stringent methodology for collecting it so people cannot evade it. For its own sake the Government should take a long, hard look at it. Incidentally, with regard to bringing back the guy who designed it, he made a dog's dinner of it so I would find somebody else to conduct the review.
This is a timely debate. A debate on taxation at present is opportune for everybody, including the Department of Finance, due to the chill winds that are blowing across Europe and across the Atlantic. They will have an effect on the Irish economic footprint over the next number of years. The most recent figures from the Department of Finance show that the deficit this year has increased compared with the deficit up to the end of April 2017. There is a budgetary deficit of €3.4 billion this year compared with a €2.5 billion deficit last year. In that context we must be very careful about discussing the elimination of taxation measures in the State. We see what is happening in Italy at present and the repercussions that will have not only on the euro but also on companies that have invested in Ireland. Things that are happening worldwide will have consequences for Ireland.
The objective of the local property tax was to widen the tax base. It has done that, but was it fair? It probably was not. It is based on the 2013 valuations. According to the CSO, average property prices increased by over 56% up to the end of 2017. If that pattern were to continue up to the end of 2019 when the revaluations are due there could be an increase of over 70% on the valuations of property. That is not universal across the board. Those are the CSO figures but most of the increase has occurred in Dublin and the other urban centres. However, I have done the mathematics on what that will mean for property tax yield. It will probably mean an increase of approximately €400 million on the €486 million that was taken in last year, so it is approaching €1 billion. Would the economists in the Department of Finance want to see that tax removed? They certainly would not.
However, is the tax fair? That is one of the criteria used to determine a tax, along with the simplicity of the tax. It is not fair. It impacts negatively on a pensioner who has a valuable property and is living on the old age pension in Senator Horkan's constituency. The fairness of the tax is probably why he put forward this motion. One of the crucial criteria for a government when crafting a taxation measure is the fairness of the tax. The blueprint in this motion should be taken on board by the Government and should be filtered into the review that is currently taking place, as was promised by the Minister for Finance, Deputy Donohoe, to try to provide some level of reassurance to people who are worried at present. Ultimately, we could see a flood of valuable properties coming onto the market from people who will not be able to afford to stay in them because the property tax will increase so much.
My wife is Canadian. I am seeking to put matters in perspective in case people think the property tax is terrible here. The tax in Canada is €5,000 for a small bungalow in certain provinces, and it is a provincial rate that applies there.
They get services for that.
The alternative is to abolish the USC and the property tax, as has been put forward by Sinn Féin and others. That is the wrong thing to do and this is the wrong time to do it. It is a crucial economic juncture for this country. We must be absolutely fiscally responsible. Otherwise we risk another crash like the one that happened in 2008 and 2009. There were irresponsible economics at that time, and it was not necessarily within the four walls of Ireland Inc. but worldwide. What happened in the United States had direct implications for what happened here. We must be ready for such tailwinds, and elimination of taxation is not the way to go.
Certainly, we should try to make the tax fairer. In doing that we should examine the 0.25% of the valuation. Additional autonomy must also be given to local councils. I believe the equalisation fund is unfair even though my county benefits greatly from it. It does not link the tax in locally. Instead, it is moving from east to west and that is not fair on the ground.
There is a need to look at autonomy and giving councillors the additional power they require. We are talking about the local property tax funding local government because it makes up 9% of local government income this year, and that is because the Government reconfigured the Local Government Fund and is providing almost €1 billion to Irish Water. We have to ask if the money should not be going into local government instead. If Irish Water does not get the money from the Local Government Fund, it will get it from Exchequer revenues anyway, because of the complex situation it is in by virtue of not being commercially viable.
There are very serious questions and we have to look at this in the round. Senator Horkan's motion comes at an opportune time and I hope the Government, instead of bashing it, listens to what it contains. Ordinary people, whether in Donegal, Dublin, Dingle or Clare, are talking about the issue and are concerned about it and Fine Gael, Sinn Féin and Fianna Fáil councillors will face the issue in the next local elections.
A number of options are available to the Government in reviewing this but whatever happens, fairness must be at the heart of any solution. I hope the Minister of State will accept the motion and filter it into the process. He might advise us as to whether there is an opportunity for any Member to make submissions to the review. Is it open for public consultation? I read about making submissions in the launch but I have not seen a lot since. Will there be an opportunity to have another debate in this House on the process?
I will answer the last question first. The submission period is closed. It was open for two weeks and was extended for a further week. It was on the Department's website and was also in the media. A total of 12 submissions were received.
My proposal is designed to clarify the background to the local property tax, LPT, and its purpose and to note that a review of the tax is currently under way at the instigation of the Minister for Finance. The introduction of the LPT 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 LPT is producing a stable revenue yield for local authorities, although both yields and tax rates are modest by international standards.
The charging structure for LPT is progressive. The basic rate of 0.18% applies up to property values of €1 million, with a higher rate of 0.25% applying on the portion of value above the €1 million threshold. In addition to the progressive rate structure, and to the extent that those with higher income or wealth tend to own properties with higher values, the LPT is a progressive tax particularly over the life cycles of taxpayers.
From 1 January 2015, local authorities have had discretion to vary the LPT rates by plus or minus 15%. A number of local authorities have exercised this option. By the end of 2017 and since its inception, LPT has contributed over €2.2 billion to the funding of local authorities. The introduction of the local property tax fulfilled the objective of broadening the domestic tax base and replacing some of the revenue from transaction-based taxes with an annual recurring property tax. In the past, there was an over-reliance on transaction-based taxes and we know only too well how that dependence proved to be an unstable source of Government revenue when the financial crisis impacted. In contrast, international experience has demonstrated that property taxes provide a secure and stable source of funding. Stability needs to be the cornerstone of our public finances now and into the future. In that context, it is therefore surprising to hear proposals from some Opposition benches for the abolition of the local property tax.
Another positive feature of the local property tax is that it enables us to achieve our goals in a way that does not directly impact on employment. The Government has a strong record in the area of job creation and is determined to do everything in its power to protect and support the creation of jobs. The local property tax, as a measure which is a tax on assets, not employment, should not adversely affect job creation. In respect of ability to pay, the LPT legislation has a number of features providing that in certain circumstances one can defer or partially defer the payment of one's local property tax. Deferral arrangements are available where there is an inability to pay and certain specified conditions are met. A qualifying person may opt to defer, or partially defer, payment of the tax. Where a person qualifies for a full deferral then 100% of the liability can be deferred. Where a person qualifies for partial deferral, then 50% of the liability can be deferred. The balance of 50% of the tax must be paid. There are a number of conditions that must be met to qualify for a deferral. In the main, the income of the individual must be below €15,000 for a full deferral and below €25,000 for a partial deferral. Thresholds of €25,000 and €35,000 apply for couples. These thresholds can be increased by 80% of gross mortgage interest payments.
The LPT is an annual self-assessed tax charged on the market value of residential properties. The Revenue Commissioners are responsible for the administration, collection, enforcement and audit aspects of LPT. The property valuation must be determined on a specific valuation date and forms the basis for the LPT charge until the next valuation date. The first valuation date for LPT was 1 May 2013 and the valuation of a property set on that date remains valid until 31 October 2019. The 1 May 2013 valuation is not affected by any subsequent improvements or extensions to a residential property. Likewise, where a property is sold during the valuation period, and the value of the property has increased, there is no additional liability to LPT providing the initial 2013 valuation was accurate.
The local property tax is now well established as a significant element of our taxation system. It is important that its position is maintained, as research and experience internationally consistently show that taxes on immovable property are among the taxes that are least detrimental to growth. The introduction of the local property tax provided an opportunity for political reform at local government level. The local property tax will provide a stable funding base for local authorities and it can be altered into the future. This is a positive reform in local democracy whereby funds are ring-fenced for local authorities.
Because of its importance, in 2015, only a matter of two years after its introduction, the Minister for Finance asked Dr. Don Thornhill to conduct a review of the operation of the local property tax, in particular any impacts on LPT liabilities due to property price developments over recent years. Dr. Thornhill had chaired the interdepartmental group on the design of a local property tax in 2012. Dr. Thornhill’s central recommendation was for a revised system whereby a minimum level of LPT 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 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%. The new system was recommended by Dr. Thornhill with a possible interim deferral of the next valuation date until November 2018 or November 2019.
Following this review, in 2015 the previous Minister for Finance proposed to Government that the revaluation date for the LPT be postponed from 1 November 2016 to 1 November 2019.
This postponement meant that homeowners continued to have their homes valued for local property tax purposes on the basis of their 1 May 2013 declared valuation, and so were not faced with significant increases in their local property tax in 2017, 2018 and 2019 as a result of increased property values. Local property tax liabilities for 2019 will also be based on the 2013 declared valuations and, again, homeowners will not see increases in their local property tax liabilities for 2019. If there was no change, the valuations of properties on 1 November 2019 would be the basis for calculating local property tax liabilities in 2020 and beyond.
The Finance (Local Property Tax) (Amendment) Act 2015 gave effect to the postponement of the revaluation date of residential property for local property tax purposes and to two of the recommendations in Dr. Thornhill’s report, involving local property tax relief for properties affected by pyrite and relief for properties occupied by persons with disabilities. Among these recommendations is that local authorities be more engaged in supporting the Revenue Commissioners and that they provide the 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.
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. I note that the motion in the names of 12 Fianna Fáil Senators mentions the possibility of extending some relief from the local property tax for those in multi-unit developments paying significant management charges. There is no specific relief from the local property tax for the payment of such management fees. Issues such as ability to pay are addressed through a system of deferrals, subject to meeting the qualifying conditions. Those individuals 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. However, it must be noted that 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 on commitments to partake in and to fund the management of the estate, and that it was the intention that many such estates would not be taken in charge by local authorities, nor 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. These are costs which homeowners in many other developments would have to fund themselves for their own properties. An exemption for apartment dwellers as suggested would, therefore, be unfair.
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. Irrespective of the position in which some people find themselves in owning property in managed estates, it is not envisaged that there would be a special category or a special exemption for them. That is not the position of the Government.
I note also that the motion as tabled contends that "Fine Gael wrongly diverted 30 per cent of the revenue in 2014 to Irish Water" While all local property tax receipts went into a single fund, that is, the Local Government Fund, it would not be correct to say that local property tax paid for Irish Water from the fund in 2014. The general purpose grant declined from €640 million in 2013 to €281 million in 2014, a fall in excess of €359 million. The Government decided in the context of budget 2014 that the former water-related elements of general purpose grants should continue to contribute to the water services costs that were previously met by local authorities. The funding provided to local authorities for the provision of water services from 2014 is governed by service level agreements between Irish Water and individual authorities and, therefore, the local authorities are no longer in receipt of funding for water services costs directly from the Local Government Fund. Instead, the fund provided a subvention to Irish Water in 2014 of €439 million. The Government does not accept the assertion made in the motion on the diversion of funding to Irish Water and, therefore, must oppose it. Also, the motion does not acknowledge that a review of the local property tax is already under way, which will report in late summer. The Minister for Finance considered it important that the Government was able to make its position clear on the local property tax so that households will be aware of its plans well in advance of the November 2019 revaluation date, and the associated local property tax liabilities in 2020 and beyond. The Minister further considered that it is essential that the principle that formed a central part of the terms of reference for the 2015 review of the local property tax, that is, achieving relative stability in local property tax payments of liable persons, both over the short and longer terms, will inform consideration of this matter.
Some local authorities have increased or decreased the local property tax. The Dublin local authorities have decreased the local property tax but while they did so, they still applied to the Government for other grants. The best example to give is sports capital grant applications. All of the local authorities received large chunks of money for sports capital projects at the same time as they decreased a funding stream. I was a Member of this House and of the other House when both Houses had to go through carnage during a difficult economic period because of a chipping away at the tax base over a period of time. Making the tax base too narrow and chasing transaction taxes was an error. We were the only EU jurisdiction that did not have a property tax. Perhaps they were all wrong and we were right, or else it is the other way around. I suggest it is the other way around. We collect approximately €500 million through the local property tax. Within the overall amount of €50 billion, it is a small quantity of money. We have a lot of other taxes that bring in an awful lot more money than the local property tax does, which have no consideration for ability to pay. Car tax has no consideration for somebody's ability to make the payment. The local property tax does not either. We can extend this further to income taxation. I know people who have properties with very large mortgages, and while they chose to take out a large mortgage, they are stretched to the limit. They pay 50% tax on all of their income, multiple times more than the local property tax. Ability to pay is not taken into consideration.
And now we have a property tax on top of that.
We do indeed. We have extended the tax base, which was appropriate and correct. As I have said, a review is under way. I suggest that Senators wait until they see the outcome of the review. That is the appropriate thing to do. As Senator Paddy Burke said, the Minister for Finance is on record as stating he would expect the local property tax to be affordable. He has said this publicly.
Will the Minister of State send him a copy of this debate for the review?
We will indeed.
I thank the Minister of State.
I expect it will be affordable, in line with what the Minister has said. Do we expect it to double or treble? That is not the expectation. Will it increase? I do not know but I have seen very few taxes decrease. They normally increase. The appropriate thing to do with taxation is to increase it in a careful incremental way by small amounts initially and that is how one increases the tax base. We are facing an uncertain period and we do not know what will happen with Brexit. We are facing a period of potential trade wars between the EU and the US, which have been and still are very closely associated trading partners.
We are in a period of uncertainly, however. We could chip away these bases and both Houses could eliminate the local property tax. The Government does not have the voting power to block that but it would be irresponsible. One should not forget it has been a tough decade. If people want to do again what we did, it would be an error. I remember the period 2002 to 2007. If all of us had known what was coming after that, we would not have done what was done in either House. We should not consider it now. We do not know what is around the corner. We are being very careful and prudent, and the Minister for Finance, Deputy Donohoe, will be prudent in making the next steps regarding revenue and expenditure. We have a balanced budget, which has taken a long time to achieve, but we must be careful and must not be reckless.
I thank the other nine Senators and the Minister of State, despite Senator Lawlor's attempt to annoy everybody and wind everybody up. I realise he is only back in the Houses and is probably a bit riled up but there is no suggestion at all in this motion that the property tax be abolished.
The Senator's colleague congratulated me on the motion before moving the amendment to delete it. I thank Senator Paddy Burke for his kind words.
It was so we could have a debate on it.
Exactly. I thank Senator Paddy Burke very much for his kind words. I reassure Senator Lawlor that abolition is not proposed anywhere. None of us referred to it. It is not what we are about.
I acknowledge much of what is in the Minister of State's speech. It is very reasonable. Much of it is stating the status quo, with which many of us, particularly those of us on the finance committee, are familiar. I thank, in particular, Senators Mark Daly, Ardagh, Ó Domhnaill, Craughwell and Boyhan. I thank Senator Norris for his always-entertaining and valuable contribution to the debate. I hope his comment that half a loaf is better than none is an indication that he might be willing to support us. I would welcome support from all Members of the House, including those in the Chamber and those who are no doubt watching intently on monitors in other parts of the building and elsewhere. Unfortunately, I am not in a position to thank Senator Rose Conway-Walsh for much of her contribution but, then again, there is probably nothing new in that. I do not blame her personally and she knows that.
The tax is to fund local services. The money is being raised in one place and spent somewhere else.
It is replacing grants that used to be available. With regard to where I live, where I used to be a member of the local authority, I talk about €850, not 85 charges, because the average property tax there is €655 before any adjustment. As I stated, almost 60% of houses are worth more than €300,000. That is before we go near those valued at €1 million. It does not make people wealthy. As Senator Craughwell outlined, a property value goes up and down. One's house is where one lives and one is not in a position to realise its value, move off somewhere else and try to hold down a job in the area where one is living. Equally, for people on fixed incomes, pensions etc., it is difficult. I accept there are deferral mechanisms in a very small number of cases.
There is probably more in the motion that the Minister of State has agreed with than he has disagreed with. He found fault with the percentage associated with Irish Water. That is fair enough. If that is the only reason he is not supporting the motion, I will take the line out. I appeal to Fine Gael not to press the amendment, which effectively fillets and eliminates the entire motion, which we have spent the last hour and 34 minutes or so debating.
With regard to the property tax, €50 out of €850 is the benefit to householders in Dún Laoghaire-Rathdown. It is a tiny percentage. There is no point in Members shaking their heads because €600 replaces grants that used to be available. These are figures from the director of finance in Dún Laoghaire-Rathdown. We have debated them many times. We are better off by €50 out of a charge of €850. The other moneys are moneys we used to get anyway, and we do not get them anymore. Those are the figures from the head of finance; they are not my figures. We debated them for many years. I was a member of the local authority in 2014, 2015 and 2016.
The Senator is choosing to ignore the State, or Dún Laoghaire, benefiting from huge volumes of money from other areas, or other Departments.
I am not ignoring it. I am saying that up to-----
People in rural-----
I acknowledge motorways that were built. I acknowledge many things. I acknowledge LIHAF. I regularly and often said good things about this Government, the Minister of State, in particular, and other Ministers in his Department when they did things right. I am pointing out that people think when they write a cheque or set up a direct debit for €850 that Dún Laoghaire-Rathdown is €850 better off. It is not. It is €50 better off. That is the point I am making and it is valid. The figures are not mine; they are figures that were substantiated and verified by the head of finance in Dún Laoghaire-Rathdown. That is the only point I am making. I will acknowledge LIHAF, the Luas, the M50 and many developments when the current Government was not in power and when Fianna Fáil was in government. Very expensive projects were carried out all over Dún Laoghaire-Rathdown. They included schools. When some people say we blew the boom, they should realise a lot of the boom was not blown. Certain things did not work out and moneys were certainly wasted but there are schools, community centres, swimming pools and libraries all over Dublin and the rest of the country that were built when the money was available to build them by the Fianna Fáil Government and, subsequently, the current Government.
Senator Craughwell referred to the living-in-Dublin allowance. That is not the point of this debate but it should be acknowledged that people in expensive properties in Dublin are spending considerable amounts of their disposable income, or their income, on mortgage payments, which means they have an awful lot less to do everything else with at the end of a week than somebody in a different part of the country. We need to acknowledge that.
My background is in accountancy and I am a prudent person. I am not recommending that one gets rid of €500 million worth of property tax. Equally, however, I do not believe it is fair on anyone in any part of the country to see a doubling of his or her property tax. Therefore, I ask that the Government withdraw its amendment. I ask the Minister of State to support the motion. If in order to pass the motion he really wants me to take out the line about Irish Water, because the percentage is wrong, I probably would live with that.
The motions calls on the Government to undertake significant reform. It says it is doing this anyway. The motion calls on the Government to ensure households do not receive substantial increases in the absence of reform. The Minister of State said that he does not want to see such increases. The motion asks the Government to examine the possibility of extending some relief from the local property tax to those in multi-unit developments paying significant management charges. I am not saying they should not pay anything but asking that there be some acknowledgment that some of the services being paid for through management companies are services that other people would get normally. I accept the fact that people buy into managed estates knowing the position.
We talk about ability to pay. Half the Minister of State's opening speech referred to ability to pay, and he said it was accounted for, and then he said in his wrap-up speech that, as with motor tax, it is not accounted for, so that makes it okay. There is a little inconsistency there. I ask the Government to withdraw its amendment. I do not want to divide the House. It is a reasonable motion. It is not asking that anything be deleted or replaced. It is now in the hands of the Minister of State.
- Burke, Colm.
- Burke, Paddy.
- Buttimer, Jerry.
- Byrne, Maria.
- Coffey, Paudie.
- Feighan, Frank.
- Lawless, Billy.
- Lawlor, Anthony.
- Lombard, Tim.
- McFadden, Gabrielle.
- O'Mahony, John.
- Ardagh, Catherine.
- Clifford-Lee, Lorraine.
- Conway-Walsh, Rose.
- Craughwell, Gerard P.
- Daly, Mark.
- Daly, Paul.
- Davitt, Aidan.
- Gallagher, Robbie.
- Gavan, Paul.
- Horkan, Gerry.
- Kelleher, Colette.
- Leyden, Terry.
- Mac Lochlainn, Pádraig.
- Norris, David.
- Ó Domhnaill, Brian.
- Ó Donnghaile, Niall.
- Warfield, Fintan.
- Wilson, Diarmuid.
Under Standing Order 62(3)(b) I request that the division be taken again other than by electronic means.
- Ardagh, Catherine.
- Boyhan, Victor.
- Clifford-Lee, Lorraine.
- Craughwell, Gerard P.
- Daly, Mark.
- Daly, Paul.
- Davitt, Aidan.
- Gallagher, Robbie.
- Horkan, Gerry.
- Kelleher, Colette.
- Leyden, Terry.
- McDowell, Michael.
- Norris, David.
- O'Sullivan, Grace.
- Ó Domhnaill, Brian.
- Wilson, Diarmuid.
- Burke, Colm.
- Burke, Paddy.
- Butler, Ray.
- Buttimer, Jerry.
- Byrne, Maria.
- Coffey, Paudie.
- Conway, Martin.
- Feighan, Frank.
- Hopkins, Maura.
- Lawless, Billy.
- Lawlor, Anthony.
- Lombard, Tim.
- McFadden, Gabrielle.
- O'Mahony, John.
- Reilly, James.