Dáil Éireann Debate, Tuesday - 23 October 2012
55. Deputy Billy Kelleher asked the Minister for the Environment, Community and Local Government when he will publish the Thornhill report on property tax; and if he will make a statement on the matter. [46163/12]
View answer67. Deputy Seamus Kirk asked the Minister for the Environment, Community and Local Government his views on the impact of differing property tax rates on the revenue base of local authorities; and if he will make a statement on the matter. [46164/12]
View answerI propose to take Questions Nos. 55 and 67 together.
The development of a system of local government funding which is fair, stable and effective and brings greater local responsibility in relation to financial matters is an essential feature in the reform programme for local government. The EU-IMF programme of financial support for Ireland contains a commitment to introduce a property tax for 2012. The programme reflects the need, in the context of the State's overall financial position, to put the funding of locally-delivered services on a sound financial footing, to improve accountability and to align better the cost of providing services with the demand for such services. It was considered that in light of the complex issues involved, a local property tax would take time to introduce and accordingly, to meet the requirements in the EU-IMF programme, the Government decided to introduce a household charge on an interim basis in 2012. This was done via the Local Government (Household Charge) Act 2011.
An independently chaired interdepartmental expert group was established under Dr. Thornhill to consider the structures and modalities for an equitable local property tax to replace the household charge. The expert group's terms of reference were to consider the design of a local property tax which is equitable and is informed by previous work and international experience, as I stated in answer to another question from Deputy Cowen.
The group submitted its report to me some months ago and these proposals and issues raised in the report will form the Government's consideration of the implementation of this tax in budget 2013. The Government has decided the local property tax will be collected and administered by the Revenue Commissioners.
In reply to an earlier question of mine the Minister stated the Thornhill report is a confidential report for his perusal before it is brought to Cabinet in five or six months and before a decision is made in the budget. My question is about the commentary since the publication of the local government reform document last week. I will ask him the question again. In addition to the local government fund which the Minister says will be derived from a tax collected centrally by the Revenue Commissioners, he has since said that local authorities will have the power to raise funds in addition to that. I ask him to clarify that if and when local authorities seek funding for some project which the Minister decides will be funded by a local tax that he will authorise the local authorities to augment the Central Fund by the collection of local taxes.
I subscribe to the principle outlined in the document that local government funding should be raised locally for local priorities.
Councillors should also have an opportunity to vary this tax, upwards or downwards as the case may be, in the context of proper devolution of responsibility. This could be done in the same way as commercial rates levied on small businesses can be varied upwards or downwards.
Will the Minister equalise the Central Fund?
That is a separate issue. The equalisation fund will continue for the moment. The matter for the Government to decide in due course-----
Weaker counties will have to levy additional taxation.
Irrespective of what will be the position in the future, the Central Fund will continue in its current form in 2013. Revenue from the household charge will go into the fund and an equalisation measure will be applied in addition to motor taxation. This revenue will replace the Exchequer contribution which we no longer have the luxury of being able to make to the Central Fund. Some €1 billion is being spent on local government through this fund and that will continue to be the case. Provision has already been made for a community fund to be developed by local government under section 127 of the Local Government Act.
Is the Minister referring to the development charge and so forth?
No, it is a separate fund. Under a community initiative provided for in legislation implemented by Deputy Cowen's party in government, it will be possible to raise money locally. There is nothing new in this.
That is in the context of-----
The Deputy must put a question.
Will the Minister confirm that local authorities will have the power to increase the property tax to fund local services in their respective areas?
In that case, he has been waffling for the past week. While he will not confirm that will be the case, he will not deny it either.
Is the Minister responsible for the environment, community and local government or for trying to get blood out of a stone? He will not be able to get €400 or €500 from the 1.8 million people who have less than €100 left after they pay their bills each month. Perhaps the Thornhill report might enlighten us on how this will be done. Will the Minister explain how those who are living on or below the poverty line will be able to pay €400, €500, €600 or €700 per annum? This is arithmetic that no one can work out and people are fearful the Minister will ask them to pay money they do not have.
I realise full well that people are under pressure and this will be taken into account in any budgetary proposal that will be made by the Government. We are obliged to deal with a highly difficult situation and doing so is not easy on families, particularly people who have mortgages they are unable to pay. It was for this reason that I exempted from the household charge people in receipt of mortgage interest supplement. This is one example of some of the exemptions I introduced at the time. Is the Deputy in favour of more income tax or the introduction of a property tax to broaden the tax base?
We favour a wealth tax on millionaires. I will explain our position during statements on the economy tomorrow.
The Minister claims the house tax will be equitable and his decision to exclude those in receipt of mortgage interest supplement addressed the issue of equity. As he will be aware, Dr. Peter Bacon has pointed out that the chances of this tax being equitable are low because so many people are unemployed, in negative equity or experiencing mortgage difficulty. Many pensioners are also in difficulty.
The Deputy should ask a question.
Is Dr. Bacon's assessment accurate? Is it virtually impossible to introduce an equitable house tax?
Does the Minister agree that the so-called property tax is a tax on the family home and that it is time we started using the term "home tax"? Some years ago the Taoiseach made the following statement:
It is morally unjust and unfair to tax a person’s home, and by so doing grind him into the ground. Indeed, in cases it could probably be unconstitutional.
Does the Minister agree with the Taoiseach's remarks?
It is strange that Deputies have not been given access to the Thornhill report. The Minister received the report some five or six months ago and will not publish it. Michael Collins, a member of the Irish Republican Brotherhood and Minister for Finance, was more open in such matters than the Minister opposite.
I am glad the Deputy remembers him.
Why can the Dáil not have sight of the report? It is ridiculous that Deputies are not being given the report six months after its publication.
If the Government is to raise some €1 billion through the household charge or home tax, the average household bill will be €600 or €700. Will the Minister confirm that €1 billion is the overall figure the Government is seeking to raise through the tax?
Many of the suggestions made by Deputies Mick Wallace and Finian McGrath could be brought forward as valid proposals once the issue of the budgetary position has been resolved. The Deputies will be able to make these points and have an opportunity to reflect on what is or is not in the budget based on the assertions they have made today. We are striving to introduce an equitable property tax, as we are obliged to do as part of the agreement negotiated with the troika in 2010.
I am amazed at Deputy Brian Stanley's reference to a notional figure of €600 or €700 per household, given that his party imposed a tax of £1,000 on people in Northern Ireland where it is in charge. That equates to €1,400.
Services such as refuse collection, fire services and school transport are delivered in return.
The Deputy should not be hypocritical on this issue. Sinn Féin cannot have it every way. It seeks to have the household charge abolished, while imposing a charge of €1,400 per household in Northern Ireland. This shows its hypocrisy on the issue of a united Ireland.
The Minister is being hypocritical in collecting money without delivering services. Incidentally, he did not answer my question.
