Vol. 794 No. 3
1. Deputy Michael McGrath asked the Minister for Finance in the context of the circa €1 billion improvement in the general Government balance as a result of the deal on the promissory notes and provided all other economic indicators remain in line with the projections made in budget 2013, his views on whether the planned adjustment in budget 2014 can be reduced and additional money invested in job creation initiatives as a result of the gain. [10831/13]
As I have stated in recent days, it is important to note that some aspects of the promissory note deal are yet to be finalised. For example, the liquidator is in the process of overseeing a valuation and sales process for the assets of IBRC, while the final payments made under the eligible liabilities guarantee, ELG, scheme have not yet been determined.
Nevertheless, simulations run by my Department estimate that the general Government deficit will improve by approximately €1 billion per annum over the coming years which will bring us €1 billion closer to attaining our 3% deficit target by 2015. However, this has to be seen in light of the estimated general Government deficits of €8.9 billion and €5.3 billion in 2014 and 2015 respectively, as per budget 2013.
While this agreement is a significant step forward in restoring sustainability to our public finances, the Government is well aware there remains a considerable gap between what we get in revenue and what we spend. This situation is not sustainable over the longer term. In addition to the requirements to bring our deficit to under 3% of gross domestic product by 2015 as per the excessive deficit procedure, EDP, it makes sense that we bring balance back to the public finances and stabilise and reduce our debt burden.
As we are only two months into the year, I will not be drawn into speculation on the composition of the next budget and the impact this deal will have on it. There are many other moving parts to be considered such as economic growth, tax take and expenditure performance. All of the above, including the impact of the promissory note deal, will form the basis of the Government's decisions regarding the budget.
Assessing the impact of the promissory note agreement on future budgetary adjustments, in isolation from other developments since the time of budget 2013, would not be a constructive or informative exercise. The State has experienced a number of significant developments since the publication of the budget including the sale of contingent capital notes in Bank of Ireland, the sale of Irish Life which represented the first time during the crisis that a company in which we have invested has been returned fully to private ownership, and the encouraging tax revenue performance in December 2012.
Additional information not given on the floor of the House
Irrespective of the above, I am sure the Deputy is well aware that the Government recognises that improving labour market conditions represents its most important challenge and, accordingly, is giving priority to job protection, job creation and supporting the unemployed. In this regard, the Minister for Enterprise, Jobs and Innovation recently published the 2013 Action Plan on Jobs, which seeks to address this important challenge. Further, I draw the Deputy’s attention to yesterdays QNHS release. Yesterday’s figures are encouraging, with employment increasing over the year for the first time since Q2 2008 and unemployment maintaining its downward trajectory, and give further weight to the consensus that Ireland’s labour market has now bottomed-out. While caution must always be taken in reading too much into the quarterly figures, the broad trend is positive.
I thank the Minister for his reply. As he knows, I welcomed the benefits from the promissory note deal. As he acknowledged in his reply, the projections are that it will result in savings of €1 billion on the general Government deficit. I did not expect him today to indicate the planned €3.1 billion adjustment for 2014 would be now €2.1 billion. I also accept there are variables with economic growth, taxation receipts and spending in line with the budget.
However, the Minister for Finance can give an indication that it is his belief that the benefits from that deal will have an impact on the budget. The Labour Party Ministers have been running around the place telling everyone who will listen that the deal will have an impact on the budget for next year but the Minister for Finance is not saying the same thing. I am simply asking whether it will have an impact on the budget. My view is that we should be using the benefits, all other things being equal, to reduce the adjustment for 2014 and to invest additional money in job creation initiatives. That is the Fianna Fáil position. I am asking whether the Minister has a position and whether he believes it will have an impact on the budget.
It is always easy to prescribe ways of spending extra money. After two years of very hard work we are getting the economy back into a position where it is growing again and where many of the indicators are pointed in a positive direction. It is only February. Over the years Ministers for Finance have not speculated about the budget, even within two months of it. To ask me to speculate about what provisions may be in the budget in February when there will be no budget until October at the earliest, in line with the two-pack, is not a reasonable request.
Anyway, the position has improved and the deal on the promissory note has brought about a situation where, all other things being equal, tax increases and public expenditure totalling up to €1 billion will not be required to be made as part of the adjustments necessary to get to the 3% target by 2015. Let us consider the recently negotiated wage agreement. There is €1 billion in that but it has not been put to the members yet. There are many moving parts.
There are several moving parts but the Government can indicate a statement of principle. The Government could state that it believes the benefits of the deal should be extended to the public, that there should be a dividend to people and that people should be given some form of relief. The Minister is saying he cannot speculate and I realise that is the traditional position of Ministers for Finance. However, other colleagues in government have been categoric in stating that the deal will have an impact on the budget next year and that people will feel the difference. I have a duty as an Opposition spokesperson to put that question, albeit many months before the budget. At a minimum the House can give an indication that this deal is valuable and that it will result in a difference in the budget for next year. That is the question I am putting forward.
I have already said to Deputy McGrath that it improves the budgetary situation by €1 billion between now and 2015. Obviously, if it improves the situation by €1 billion between now and 2015 then unless something disastrous happens the public will see the benefit of that improvement over the course of the budgets.
Deputy McGrath is going down the road which got his party into trouble previously. As soon as they see a little money they want to go out and promise the people suddenly that they will spend it, that they will be back, that they will have a lash and that the nice people of Fianna Fáil will spend money and get people back to work.
It is not about spending it. It is about giving people relief.
Deputy McGrath should be very careful. It is what destroyed his party. He should not destroy it a second time.
The Minister needs to start telling his Government colleagues that.
Do not destroy it a second time.
2. Deputy Pearse Doherty asked the Minister for Finance his views on the raising of interest rates by AIB on variable rates mortgages; and if he will call on the bank to explain its decision and let it know it is unacceptable. [10748/13]
While the Government is acutely aware of the increasing financial stress that some householders are facing in the current environment, ultimately, the pricing of financial products, including standard variable mortgage interest rates, is a commercial matter for the management and the board of the institution. At the same time, the Government must ensure that the day-to-day running of these institutions has regard to competition, market conditions and the need to develop stable commercial enterprises to meet the long-term credit needs of households and businesses.
The Deputy will be aware that the relationship framework with the bank provides that the State will not intervene in the day-to-day operations of the bank or its management decisions. The frameworks are published on the Department of Finance website. I must ensure that the bank is run on a commercial, cost-effective and independent basis to ensure the value of the bank as an asset to the State, as per the memorandum on economic and financial policies agreed with the EU Commission, the ECB and the IMF.
Neither the Central Bank nor the Department of Finance has a statutory function in respect of interest rate decisions made by individual lending institutions at any particular time. I understand that Allied Irish Banks has not yet announced any increase to the standard variable rate. AIB last increased the standard variable rate in November and that increase brought the rate to 4%, lower than most of the other financial institutions. For example, Bank of Ireland and Permanent TSB have rates of 4.35% and 4.34% respectively.
To fund mortgages the bank must borrow at wholesale rates, which are currently higher than the ECB base rate. The bank must ensure that the rate it lends at is economically sustainable and provides a return for the bank and, ultimately, the State as its shareholder. I understand that the Central Bank pays attention to the effect of any increases in the standard variable rate on mortgage arrears and it would no doubt be concerned if banks were exacerbating their arrears problem and as such impairing their ongoing feasibility by such actions.
Tomorrow we will begin to discuss the family home or household tax again. We have already seen the start of the water charges legislation in the House. It was stated earlier in the House that €30 billion of austerity measures have been imposed on the people. Yet perhaps the greatest crisis we are in the middle of - a singular crisis which the Government has not acknowledged - is the crisis of those with mortgages in distress or default. I cannot say it often enough: one in four people are in mortgage distress and 115 additional people fall into that category every day.
The Minister stated that setting rates was a commercial matter for the institution and I understand that. However, it has always been a commercial matter for the institutions but that has not stopped the Minister for Finance, his colleagues and the Taoiseach in the past from banging their fists on the table and demanding that the banks deal with interest rates. That was immediately after they got into government. Why is there a different approach now?
AIB, while not announcing a rate change, has signalled that it plans to increase the rate. Let us be clear: this bank got billions of euro of Irish taxpayers' money. If AIB increases the variable interest rate by 0.25%, it will be the highest lender in the market in terms of interest charged. It is a bank that has increased its interest rate twice in the last quarter of 2012, with two increases of 0.25%. The bank is turning the screw on ordinary people, who are concerned about being unable to pay their mortgages at this stage.
A question please, Deputy.
These people are under pressure. Today I read an article in a newspaper to the effect that the Government will facilitate the repossession of homes. This really puts the fear of God up into people, who are concerned about how they will keep a roof over their heads and pay their mortgage bills. It is a completely different approach from what the Government promised in the programme for Government after the election.
A question please, Deputy.
The Government stated that it would ask the bank to forego a 0.25% increase. Why has that never materialised? Will the Minister call in the banks now, just as he did less than two years ago, and put it to them in the middle of this mortgage crisis that it makes absolutely no sense to increase the rate? I direct the Minister to my original question: what is his view on the bank increasing the rate?
As I have said repeatedly, there is a signed agreement between the previous Government and the banks, which we intend to honour, to the effect that there will be no interference with the commercial decisions of any of the banks in which the State has a shareholding or in any other bank. The Deputy would not thank me if I were the type of Minister who would interfere with private commercial decisions of the banks or try to use any leverage as the Minister for Finance to influence the banks one way or another on behalf of particular clients. We cannot run a country in that way. We have seen examples of that previously and in other countries and we are not going there.
What I want to do with the banks is continue to make them profitable. The decision taken this week to abolish the bank guarantee means that the banks will no longer have to pay the levy they were required to pay for the use of the guarantee and that will increase their profitability by approximately €1 billion throughout the sector. That will put the banks in a better position to give a better service to people. However, decisions on how the banks apply their new-found profitability is a matter for them.
AIB is at the lower end of mortgage lending. It was well off the pace previously and was losing money on practically every mortgage it wrote.
If AIB proceeds with its plan it will be the highest mortgage lender in the State. All it has to do is increase its rates by 30 basis points and it will be the highest. The Minister for Finance owns this bank on behalf of the Irish people. He says it would be wrong to interfere because that is not the way to run the country but he called the banks into Government Buildings. His Deputies were banging their fists and telling the media they were going to insist on the banks passing on interest rate decreases. In fairness to the banks, they complied. What was good then is good now. It is unpalatable for the tens of thousands of people who are in mortgage distress with AIB or are just about surviving that the Minister will sit idly by while a bank which received €21 billion of the money they have foregone in taxes over the past six years charges the highest interest rates in the market. He should use his influence because it will be disastrous for the economy if AIB is allowed to increase its rates given that we already face an unprecedented crisis with mortgages.
I have made my position very clear. The Deputy misused statistics either deliberately or inadvertently. It is totally and blatantly incorrect that one in four Irish people has problems with mortgages.
The figure is 23.5% of domestic mortgages.
No, the percentage is the percentage of people who have mortgages. More than half the people in the country do not have mortgages. He is putting out the notion that 25% of the Irish nation are under pressure in respect of mortgages. It is simply not true.
It affects 160,000 families.
We are removing the guarantee, which will increase the banks' profitability and we will ask them to further address their cost base because I believe their costs are too high. As the banks normalise they will give a better service to the Irish people but they must make commercial decisions without interference from politicians. If the Deputy is advocating a regime of banking in Ireland in which politicians, whether in or out of office, can influence commercial decisions by banks, he is going straight back to the days we have just left, when a telephone call to certain people would get a loan. We are not going there.
3. Deputy Seamus Healy asked the Minister for Finance noting that in the course of a reply to Deputy Boyd Barrett on 3 October 2012, he provided data for year 2012 on the incomes of the top 10,000, top 1%, top 5%, top 10% of taxable units and their tax payments and effective tax rates (details supplied) and that the data were based on projections by the Revenue Commissioners of expected earnings and expected revenue in that year, in view of the distribution of incomes in 2009 and subsequent developments, if he will provide equivalent data for the year 2012. as revised. in view of actual revenue outcomes for year 2012; if he will further provide the equivalent data for the year 2011 based on actual revenue outcomes for that year and the number of public servants in each earning category for the years 2011 and 2012; and if he will make a statement on the matter. [10749/13]
I am informed by the Revenue Commissioners that the figures for incomes and tax as provided in my reply to Question No. 65 of 3 October 2012 were based on projected estimates of the total liability to tax in respect of the tax year 2012 and were not based on cash receipts expected to be collected in the corresponding calendar year. The figures were estimates from the Revenue tax forecasting model using actual data for the year 2009, adjusted as necessary for estimated income and employment trends in the interim. Figures of cash receipts are subject to timing arrangements and can also be distorted by cash flow adjustments. The incomes and tax values as calculated by the model cannot, therefore, be revised or updated by reference to actual revenue outcomes for years 2011 or 2012. For ease of reference, the information I provided for 2012 in my reply of 3 October last will be set out in the Official Report.
|
- |
Top 1% of income earners |
Top 5% of income earners |
Top 10% of income earners |
Top 20% of income earners |
Top 10,000 income earners |
|
Number of income earners |
21,650 |
108,250 |
216,500 |
433,000 |
10,000 |
|
Gross income |
€8,742m |
€20,122m |
€29,600m |
€43,300m |
€5,959m |
|
Average earnings |
€403,760 |
€185,885 |
€136,710 |
€100,000 |
€595,900 |
|
Amount of income tax, USC & PRSI |
€3,349m |
€7,145m |
€9,849m |
€13,186m |
€2,321m |
|
As % of total Income tax, USC and PRSI |
18% |
39% |
53% |
71% |
13% |
|
Effective tax rate |
38% |
36% |
33% |
30% |
39% |
It should be noted that the figures for tax and effective tax rate include income tax, PRSI and universal social charge. The figures are estimates from the Revenue tax forecasting model using actual data for the year 2009 adjusted as necessary for income and employment trends in the interim. These are, therefore, provisional and likely to be revised. In addition, gross income is as defined in a Revenue statistical report for 2010. The numbers of income earners shown in the table counts a married couple who have elected or have been deemed to have elected for joint assessment as one tax unit, although USC and PRSI are individualised charges, and as such the yield is calculated on the basis of individual incomes.
The basic data underlying the figures of tax and incomes provided in this form for 2012 were compiled as part of the preparations for budget 2013. Corresponding data for 2011 were not prepared as they would have been less relevant for budgetary considerations and equally demanding on resources. For that reason, figures are not readily available for 2011 on the same basis and could not be collated in the time available for this reply due to the significant data processing work involved. This is a matter which the Deputy needs to study. It is not something on which I can supply further information across the House.
Additional information not given on the floor of the House
If it will assist the Deputy, I am providing the following table, showing a projected distribution of 2011 incomes by income range, which I included in my reply to Question No. 134 tabled by Deputy Dowds on 7 February 2012. This table includes figures for income tax but not for USC or PRSI.
|
Gross Range |
Income |
Numbers |
Tax Paid |
|
€ |
€ |
€ |
|
|
0 - 5,000 |
487,986,108 |
227,095 |
0 |
|
5,001 - 10,000 |
1,255,663,199 |
167,836 |
446,003 |
|
10,001 - 14,000 |
1,779,984,419 |
147,969 |
4,022,590 |
|
14,001 - 15,000 |
539,083,092 |
37,184 |
1,688,461 |
|
15,001 - 15,514 |
291,944,937 |
19,146 |
958,432 |
|
15,515 - 17,542 |
1,276,179,382 |
77,181 |
6,147,635 |
|
17,543 - 20,000 |
1,931,125,757 |
102,910 |
30,974,477 |
|
20,001 - 30,000 |
9,573,599,824 |
385,744 |
381,082,644 |
|
30,001 - 33,343 |
3,400,149,735 |
107,551 |
207,574,683 |
|
33,344 - 40,000 |
6,800,653,487 |
185,876 |
564,306,322 |
|
40,001 -,50,000 |
9,142,633,523 |
204,850 |
1,058,021,456 |
|
50,001 - 60,000 |
7,506,470,503 |
137,311 |
1,086,273,677 |
|
60,001 - 70,000 |
6,113,230,290 |
94,466 |
992,452,875 |
|
70,001 - 80000 |
5,106,969,027 |
68,362 |
913,147,308 |
|
80,001 - 90,000 |
4,000,986,987 |
47,247 |
773,899,034 |
|
90,001 - 100,000 |
3,108,236,315 |
32,818 |
642,150,132 |
|
100,001 - 125,000 |
5,316,263,933 |
47,941 |
1,196,849,254 |
|
125,001 - 150,000 |
3,121,226,315 |
22,950 |
762,690,308 |
|
150001 - 175,000 |
1,893,410,584 |
11,746 |
483,959,819 |
|
175,001- 200,000 |
1,288,116,235 |
6,910 |
336,870,896 |
|
200,001 - 250,000 |
1,763,013,081 |
7,942 |
469,425,803 |
|
250,001 - 300,000 |
1,151,975,837 |
4,226 |
312,101,016 |
|
300,001 - 350,000 |
828,763,978 |
2,563 |
225,119,785 |
|
350,001 - 400,000 |
597,687,366 |
1,601 |
166,979,624 |
|
400,001 - 450,000 |
476,565,416 |
1,126 |
131,183,043 |
|
450,001 - 500,000 |
373,468,949 |
788 |
104,398,370 |
|
500,001 - 750,000 |
1,199,017,554 |
2,000 |
334,290,603 |
|
750,001 - 1,000,000 |
534,787,080 |
626 |
154,811,699 |
|
1,000,001 - 2,000,000 |
677,124,288 |
519 |
180,750,996 |
|
Over 2,000,000 |
1,016,296,602 |
117 |
345,279,341 |
|
Totals |
82,552,613,799 |
2,154,599 |
11,867,856,287 |
The figures are estimates from the Revenue tax forecasting model using actual data for the year 2009 adjusted as necessary for income and employment trends in the interim. These are, therefore, provisional and likely to be revised. It should be noted that the income ranges shown in the above tables relate to gross income as defined in a Revenue statistical report for 2010. It should also be noted that a married couple who has elected or has been deemed to have elected for joint assessment is counted as one tax unit.
Furthermore, the estimated earnings of public servants are not separately identifiable in the figures projected for 2011 and 2012. The latest relevant sector-based information available on income earners in the tax system is derived from income tax returns filed for the income tax year 2010 and represents about 95% of all returns expected at the time the data were compiled for analytical purposes. The data relating to the public sector include individuals in receipt of various forms of income from public sources that would not normally be regarded as constituting employment within the public service, for example, those receiving fees or those on State boards. On the basis of the available tax based data, it is not possible to identify and exclude income from public sources to groups that would not normally be regarded as employed within the public service or to distinguish the earnings of employees associated with typical work patterns. Accordingly, it is likely that the number of public servants from this source is overstated. On that basis, the total numbers of public sector employees, and the breakdown of those numbers by income ranges, is set out as follows:
|
Income Tax Year 2010 |
Public Sector Employees |
|
Range of Gross income |
Total Number |
|
€0 – €20,000 |
109,492 |
|
€20,001 – €30,000 |
72,315 |
|
€30,001 – €40,000 |
81,786 |
|
€40,001 – €50,000 |
60,480 |
|
€50,001 – €65,000 |
48,105 |
|
€65,001 – €80,000 |
24,100 |
|
€80,001 – €100,000 |
15,144 |
|
€100,001 – €150,000 |
10,229 |
|
€150,001 – €185,000 |
1,188 |
|
€185,001 – €200,000 |
252 |
|
Over €200,000 |
854 |
|
Totals |
423,945 |
Further historical details on incomes earned in the income tax year 2010 are provided in Tables IDS 1 to 17 of the income distribution chapter of the Revenue statistical report for 2011, which is available on the Revenue website. A married couple which has elected or has been deemed to have elected for joint assessment is counted as one tax unit.
I thank the Minister for his reply. We know from previous replies that the 10,000 highest earners have astronomical incomes. The figure is approximately €595,000 per individual. Even after the effective tax rate and PRSI are taken into account, they have incomes of in excess of €300,000. These are astronomical figures compared to the average industrial wage or social welfare rates. Is it not fair to ask these individuals to make an additional contribution to the Exchequer? Should they not give up at least another €1 billion in tax and PRSI? They would still be very wealthy, with average incomes of approximately €264,000. Is it not reasonable for these individuals to pay a higher rate of tax on a fair basis?
Even with the use of tax breaks there is a minimum tax rate of just under 30%. Everybody will pay that amount. Beyond that figure, the rates of taxation are very progressive. Under the new deal, senior civil servants have been hit hard by the wage reduction. With everything thrown in, their marginal rate of tax is 61% or 61.5%. Obviously people who earn higher incomes have more take home pay but the levels of taxation are quite progressive.
The marginal rate is quite different from the effective rate, which is in the region of 39% for these individuals. I suggest that, at a time when we are abolishing mobility payments, taking €350 million per year from low paid public sector workers, abolishing exceptional needs payments for needy families and imposing a property tax on households in negative equity or mortgage arrears, individuals on these levels of income should be made to pay their fair share in order to make a reasonable contribution. They are well able to contribute another €1 billion to the Exchequer while remaining very wealthy.
It is always speculative at what point one pitches personal taxation. We are in a common travel zone and can move to and live in any of the 27 member states of the European Union. If we tax people too high we do not want a situation in which everybody who is wealthy leaves the country because we want the wealthy people to invest and be productive in terms of providing jobs for other people. A balance must be found but they pay their fair share. The top couple of per cent of wage earners contribute some 20% of all taxes.
4. Deputy Michael McGrath asked the Minister for Finance if he will review the plans for the implementation of the local property tax to take ability to pay into account in view of the problems in the economy including mortgage arrears, unemployment and weak disposable income. [10832/13]
In designing the local property tax, the interdepartmental expert group chaired by Dr. Don Thornhill, the Thornhill group, had due regard to issues such as ability to pay and considered the provision of waivers or deferrals for households unable to pay the tax or where a payment requirement would cause hardship. For individuals on low incomes or those whose only income source is from the Department of Social Protection, the Finance (Local Property Tax) Act 2012 provides for the possibility of deferring the local property tax, LPT, charge in certain cases.
To qualify for a deferral, the residential property must be occupied as a sole or main residence. The income thresholds for a full deferral will be €15,000 for a single person and €25,000 for a couple, whether married persons, civil partners or cohabitants. A person may claim a deferral if their income will not “as can reasonably be foreseen at the liability date” exceed these thresholds in that year.
An increased income threshold applies in the case of properties occupied as a sole or main residence and subject to a mortgage. In such cases, the gross income thresholds may be increased by 80% of the mortgage interest payments. A deferral option in qualifying cases in this regard will apply until the end of 2017 and will assist individuals currently in mortgage distress. A deferral of up to 50% of the LPT liability will be possible where the gross income of the liable person does not exceed €25,000 for a single person or €35,000 for married persons, civil partners or cohabitants. A deferral of 50% of the LPT will also be available where gross income does not exceed the above thresholds, that is €25,000 single, €35,000 couple, as increased by 80% of the gross mortgage interest payments that a liable person expects to make by the end of the year for which the gross income is being estimated. This type of deferral will also be available until 31 December 2017.
Additional information not given on the floor of the House
Where a liable person no longer satisfies the necessary conditions, amounts deferred prior to the date on which eligibility ceased may continue to be deferred. Interest of circa 4% per annum will apply to any amounts deferred. The deferred amount, including interest, will attach to the property and will have to be paid before the property is sold or transferred.
The thresholds were based on the recommendations of the Thornhill group. The Government accepted the income thresholds for a full deferral and adapted the income thresholds for a partial deferral so that they are €10,000 rather than €5,000 above the thresholds for a full deferral.
To determine whether deferral applies for 2013, a person is required to estimate on 1 May 2013 what his or her total gross income for 2013 will be. Gross income from all sources consists of total income before any deductions, allowances or reliefs that may be taken off for income tax purposes and includes income that is exempt from income tax and income from the Department of Social Protection but excludes child benefit.
I appreciate that some property owners may find themselves unable to pay local property tax but do not qualify for a deferral under the existing legislation. For this reason, the Finance (Local Property Tax) (Amendment) Bill 2013 provides that a person who has entered into an insolvency arrangement under the Personal Insolvency Act 2012 may apply for deferral of the LPT that is due during the period for which the insolvency arrangement is in effect. The 2013 Bill also provides that a person who suffers both an unexpected and unavoidable significant financial loss or expense, as a result of which he or she is unable to pay their LPT without causing financial hardship, may apply for full or partial deferral. Claims for this type of deferral will require full disclosure of the person’s financial circumstances, supporting documentation and any other information required by Revenue. Following an examination of the information provided, Revenue will determine whether deferral should be granted. The detail of how this type of deferral will operate and the criteria that will be used to determine eligibility will be set out in guidelines due to be published by the Revenue Commissioners shortly.
Details of the deferral arrangements are available on Revenue’s website www.revenue.ie, where the commissioners have recently published a useful guide to local property tax. This will be revised to take account of the provisions in the Finance (Local Property Tax) (Amendment) Bill 2013. It should be noted, however, that the provisions contained in the 2013 Bill are subject to its enactment.
I thank the Minister for his reply. We will have a fuller debate on this issue tomorrow when the legislation comes before the House, but today I want to focus on the issue of ability to pay. The Government's efforts to take ability to pay into account are woefully inadequate. For example, a family earning anything more than €480 per week gross - before tax and other deductions - is not entitled to defer the property tax. A family with three or four children will probably spend between €200 and €250 per week on groceries alone, before it pays any other bills such as gas, electricity, school costs and so forth. That family does not have a bob to spare; it is broke. That family will not be able to afford this tax. If a family cannot pay the tax but the pay amount is in excess of €480 a week, a penal interest rate of 8% per annum will be applied to the debt. We will have the debate tomorrow, but the issue of ability to pay this tax must be readdressed.
If I had time to read the remainder of my answer, I would have explained that I appreciate that some property owners may find themselves unable to pay local property tax, but do not qualify for a deferral under the existing legislation. For this reason, the Finance (Local Property Tax) (Amendment) Bill 2013, which we will debate tomorrow, provides that a person who has entered into an insolvency arrangement under the Personal Insolvency Act 2012 may apply for deferral of the LPT that is due during the period for which the insolvency arrangement is in effect. The 2013 Bill also provides that a person who suffers both an unexpected and unavoidable significant financial loss or expense, as a result of which he or she is unable to pay their LPT without causing financial hardship, may apply for full or partial deferral. Claims for this type of deferral will require full disclosure of the person’s financial circumstances, supporting documentation and any other information required by Revenue. Following an examination of the information provided, Revenue will determine whether deferral should be granted.
We can have a fuller discussion on this tomorrow. I will introduce a significant amendment which will not fully meet the Deputy's suggestion but will go some way towards it.
With respect, it will not meet my suggestion. Essentially, it provides that somebody entering an insolvency arrangement may be entitled to a deferral, even if that person's income is in excess of the limit. A gross amount of €480 per week for a family with children is a very small amount of money. Half of it alone is spent on groceries and the rest is quickly accounted for by the payment of essential household bills. The Minister set the thresholds far too low. People on that level of income are absolutely broke. They do not have a bob and they will not be able to afford to pay this property tax. If the Minister is to revisit any aspect of the tax - he appears to be not for turning on the fundamental issue - I ask him to look at the issue of the thresholds that will allow people a deferral. This will not mean the tax will not be paid. It will be paid eventually. The current threshold figures are miserly.
It was the Fianna Fáil Party when in office which brought about and negotiated a situation where we are obliged to introduce a property tax as part of the programme.
Fine Gael said it would not introduce it.
Deputy McGrath himself, before the last budget, published an alternative budget in which he maintained a flat rate property tax, with no allowance for income, would continue to be imposed on people.
There was an allowance for income. That is not true.
Fianna Fáil said it would continue the flat rate property tax and it allowed for no variation depending on income. Explain that to me.
The Minister is wrong on that. That is not true. We allowed for €120 million a year to provide appropriate exemptions for people.
Based on income.
Yes. Go back and look at our proposal.
Question No. 5 is in the name of Deputy Maureen O'Sullivan, but as she is not in the Chamber, we will move on to other questions.
