I move:
That Dáil Éireann condemns the Government policies that discriminate against home ownership, with particular reference to the budgetary changes curbing mortgage tax relief and the extension of the Residential Property Tax; and furthermore calls on the Government to adhere to the policy of successive Governments of supporting families in providing their own homes.
I wish to share my time with Deputy Durkan. The issues in the budget that provoked the greatest ire are those we wish to debate tonight. It is with regret that I move the motion. We debated the budget but we have yet to debate the Finance Bill. In the aftermath of the budget it quickly became clear that one of the aspects that upset people most was the proposed extension of the residential property tax net. We were told by the Tánaiste that there was no need to worry, everything would be all right when everyone received their revised tax free allowance for the new tax year 1994-95. We were assured all taxpayers would be better off under this budget. Unfortunately home owners with mortgages are significantly worse off due to the curtailment of mortgage relief and the widening of the residential property tax net.
What is beyond doubt is that the total income tax receipts estimated by the Minister for Finance on budget day will be £23 million higher than the revenue received from income tax last year — in excess of £3.7 billion. The Minister will take in more despite the fact that on income tax all his previous targets have been overshot.
In dealing with the twin issues of mortgage relief and residential property tax it is a matter of public record that both Fianna Fáil and Labour utterly reneged on the commitments given during the last election campaign. What we see are the same urban PAYE soft targets — round up the usual suspects — being hit in the fine print of the budget. The middle income sector are reeling from the effects of the last two budgets brought in by the Minister. Not only do we have home ownership changes but the most miserly and mean cut of all—doubling the threshold for medical allowances claimable by a family from £150 to £300 and on top of that, starting next year, phasing down VHI relief from 48 per cent to 27 per cent. Increasingly, the middle income sector is faced with the prospect of paying more and more and being entitled to less and less.
We have a very proud record of home ownership. Over 80 per cent of all homes are privately owned by the householder. It is one of the highest rates of home ownership in Europe and the world. Is this an accident or part of the Irish psyche? No, it is because successive Governments of all hues sought to assist people in providing their own homes. This was done through tax relief and grant aid. We saw it as beneficial to assist the construction industry because it is labour intensive. Last Friday on "News at One" on RTE the Minister came clean with his hidden agenda and said he wanted "less investment in bricks and mortar". The Government does not want people to invest in providing their own homes but it has no mandate for this change in policy. For the Minister to state that those opposing the residential property tax were an hysterical well heeled minority shows how out of touch Ministers become when they get the Mercs and perks of office.
I have a pile of letters from people complaining about their positions. The typical case is of people who married 20 years ago and bought a house for £20,000. It was the biggest investment they made. They reared and educated their family with little or no help from the State. Today their house is in the residential property tax net. They made sacrifices and worked hard and now they find that at the end of their days they have to hand over more tax to the Revenue Commissioners. The reduction in mortgage relief affects well in excess of 100,000 people yet the issue was barely highlighted.
Many people sent their tax free allowance certificates to me. One gentleman from Cork stated that his income relief last year was £3,048. This year, when we are told by the Tánaiste that he will be better off, that person's mortgage relief is £1,675. Despite the marginal changes in his personal allowances overall his allowances are down from £17,088 to £16,525. Another case is a teacher from County Westmeath. He was notified on 15 March 1993 that his interest relief was £3,400. This year it is £1,817. They are but two examples. I could refer ad nauseam to other cases. People are perplexed and in a mathematical maze. They ask Deputies if there has been an error but alas there has not been any. The fine print of this year's budget states three things about mortgage relief — first, the maximum one can claim is 80 per cent of mortgage expenses; second, the Revenue Commissioners because of the reduction in interest rates, were assessing mortgages being payable at 12 per cent and they are now assessing them at 8 per cent for the average mortgage; third, this year mortgage interest relief is allowable at the marginal rate of 42.75p in the pound and not 48 per cent, the rate at which people pay tax and ultimately they will be able to claim relief only at 27p in the pound. This is a triple whammy on mortgage holders before they have to deal with local service charges and the house tax.
People are crippled by the loss of mortgage interest relief. My figures, which I got in response to parliamentary questions, show that some 320,000 people claim mortgage interest relief. I hazard a guess that well in excess of 180,000 people are facing substantial losses in mortgage interest relief. Let me give two typical examples. A person with a typical mortgage of £40,000 — today it was confirmed by a prominent building society that this is the average mortgage in Dublin — would have had relief of £1,977 whereas this year the relief will be worth £1,008, a reduction of about £1,000 or £20 per week. For somebody with a mortgage of £50,000 the news is worse and they have to bear the loss of £1,200. Over the next three years as mortgage interest relief is lowered to the standard rate of tax, the PAYE sector principally will lose £55 million. People entered into long term commitments in good faith and took out mortgages over 20 years but now in the middle of the term they find that the rules have changed. There was no warning of this in the election.