My party tabled this motion for the consideration of the House because of public anger about the property tax and water charges which arises from the fact that the general body of taxpayers believe they are already paying through the nose in income tax.
I wish to develop the argument about double taxation, a phrase often bandied about in this argument, which requires analysis. Approximately 80 per cent of Irish homes are owner occupied, representing the highest number in any member state of the European Union. The imposition of property tax and service charges involves taxing the same body of people who are already paying income tax. That is one of the great weaknesses in the argument put forward by various economic commentators down through the years who have made the case that we should have more extensive property tax arrangements here. The reality is that if property taxes are extended it will involve taxing the same base of people who are already paying income tax. The comparison between here and continental countries made by the Minister of State, Deputy Doyle, last night when considering the property tax issue is fallacious. Because we have a far higher incidence of owner occupation of the family home than any other member state of the European Union, the introduction of a property tax on the family home is, in effect, a form of double taxation. As a matter of history, most Irish people have had a strong itch to buy and own their home — to invest in its bricks and mortar. It is a form of confiscation to introduce a tax on the family home when dealing with taxpayers who are already paying a substantial amount of income tax.
As pointed out by my party spokesperson on finance last night, the double taxation arguments is reinforced in the case of Dublin by the fact that in the year ending 5 April 1994 75 per cent of the receipts of the residential property tax were paid by persons living in Dublin city and county and in the year ending 5 April 1995 77 per cent of those paying that tax resided there.
Since the commencement of the debate an announcement was made outside the House by Deputy Broughan yesterday evening that it is now Labour Party policy to eliminate this tax. I am very glad to hear that and in a sense it would appear that our motion has had a response from the benches opposite. Although Deputy Broughan does not hold a Government position, apparently it is stated Labour Party policy that this tax should be eliminated. In that sense to press the case much further might be otiose because it is accepted on the benches opposite that the property tax should be eliminated.
I was somewhat concerned to hear the argument made by the Minister of State, Deputy Doyle, last night that there was nothing wrong with the fact that the population of Dublin and Galway had to bear this tax more than people in other parts of the country because it was their good fortune to live in houses that have high capital values. The people who must pay this tax are already paying income tax and substantial amounts of it if we are to believe the receipts published by the Commissioners — that highlights the double taxation argument.
An attempt has been made by the Government parties to relate this subject to the question of local government funding. The residential property tax has always been an item of central Government receipts. The receipts from the residential property tax have never been allocated to local authorities, but the relationship between it and local government funding has arisen because I assume the Democratic Left and the Labour Party are concerned to eliminate service charges as well as the property tax, but that would involve separate considerations. I am opposed to service charges in the Dublin area and would like to see them eliminated, but the considerations that would have to be taken into account in that regard are somewhat different because an adequate funding base must be established for local government. It was made clear by my party leader yesterday evening that Fianna Fáil is prepared to provide that base, but it must come from within the existing tax system.
I urge the Government to accept our motion on the basis it is apparent from the Labour backbenchers that in any event it is official Labour policy to dispense with this tax and, therefore, I do not see why there is opposition to the motion from the Government side. It appears to be agreed in this House that the residential property tax is an inequitable form of taxation and should be eliminated.