Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Friday, 11 Dec 2015

Vol. 900 No. 3

Finance (Local Property Tax) (Amendment) (No. 2) Bill 2015 [Seanad]: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

If property price inflation continues, the average family will face a property tax bill approximately €180 higher by 2019. As a result, the Fine Gael backbenchers from south Dublin and elsewhere come into the House and create a racket and burn the ear off the Minister for Finance. They say that now, as the election approaches, people are facing a massive increase in property charges on their houses and ask what the Government is going to do about it. They say seats are on the line and call for a change in policy. Cynically, the Government decides to freeze the charge and leave it to the next Government to make a change. The question that should be asked is whether property reflects the wealth and income of a family. It does not because the crash has sundered that relationship and the Government thinks the people are naive in regard to what it is doing through this Bill today.

This Bill is an admission that the local property tax system is broken. For a long time, Sinn Féin has been saying the property tax is an unfair and broken model. We need to ensure we have a fairer model.

Will Sinn Féin vote against this today?

There are no Labour Party Deputies present in the House. However, Labour Party Deputies have been singing about this matter during the past year. Where they are on local authorities with Sinn Féin, which has been using its mandate to reduce local property tax, they have been criticising what Sinn Féin has been doing and saying it is hollowing out the income of local authorities, which is required for local authority services. Now we will see the Labour Party is happy to row in behind Fine Gael on this Bill and do what, in effect, Sinn Féin was trying to do, namely, ameliorate the impact of an unfair tax on those finding it difficult to pay that tax. It is disappointing no Labour Party Members are present.

I am also disappointed that this Bill just tinkers around the edges of this tax and does not address the issue as it should. Exemptions are mentioned but Sinn Féin in government would exempt every family from the property charge. We would seek a taxation system that reflects ability to pay. The Labour Party has spoken about a wealth tax for properties valued at over €1 million. Very little has been achieved in that regard. The property tax has a greater impact on those on low incomes.

It is a pity this debate is being rushed. I take it that, as a result of what the Chief Whip has announced, we may get a longer time to debate the Bill.

There are just two and a half hours for this debate. The Deputy has 16 of his 30 minutes remaining.

Sinn Féin has submitted amendments and I hope we will have time to debate them. It will be a travesty if we do not. I hope the Government will respond and say that it will amend the Bill to ensure that exemptions will include people suffering as a result of the floods. Mention was made of exemptions from the tax for people whose homes have been affected by pyrite but only 80 people have benefited from that exemption. Only 5% of those people whose homes are affected have benefited so far and the paperwork required to deal with gaining recognition of their pyrite problem has almost cost more than what has been gained through the exemption.

I am disappointed the Minister has not sought to provide a similar exemption for those affected by the mica block issue in Donegal or for the people in Longboat Quay or in Riverwalk Court in County Meath. Many people live in accommodation which is not fit for purpose and does not comply with safety regulations, yet the Government is blind to that in respect of this tax. These residents are left outside the scope of the exemptions and are forced to make declarations on their own behalf. It is unfair to place the legal pressure on their shoulders.

This is, unfortunately, a failed tax and no level of spin can change that. The Government is coming to the table for two reasons: to admit the value of a home does not equate to the tax one pays and to put a cap on it because there is an election around the corner and Government party Deputies are under considerable pressure.

To answer the Deputy's question, two and a half hours have been provided for Second Stage and 30 minutes for Committee Stage. That was ordered yesterday.

For the Technical Group, I call Deputy Catherine Murphy, Deputy John Halligan, Deputy Shane Ross, Deputy Paul Murphy, Deputy Richard Boyd Barrett, Deputy Clare Daly, Deputy Mick Wallace and Deputy Joan Collins.

There are four of us sharing the slot if that is all right.

There is a total allocation of 30 minutes.

When the Minister of State made his opening statement he referred to property tax being a secure fund. Motor tax was a secure fund and local authorities were previously provided with resources from it through the local government fund. The guarantee from 1997 was that the fund would be ring-fenced. Property tax has essentially become a replacement for the local government fund.

When one tracks motor tax year on year, one can see how it has been stripped down to the point where there will not be a general purpose fund and local property tax will be that fund. In fact, an amount is taken each year as a subvention for Irish Water. There is no reference to that in the Bill this year but there has been a reference in previous years so I assume that will continue to be the case. This is exactly what is happening, so let us frame it correctly. The 2016 to 2019 period gives people certainty in terms of valuation and benefits those who have the most expensive homes, in particular ones that do not have a mortgage. It is noteworthy that the measure is coming in advance of a general election. This picks up on a point made by the previous speaker, although I would not be giving Fine Gael the election at this stage-----

-----about coming back in 2019.

It could be a Sinn Féin and Fianna Fáil Government.

Or a Fianna Fáil and Fine Gael Government.

It is obvious that the county that pays the most is Dublin. There are net contributors to the fund and net recipients.

There are positive changes on pyrite but only a very small number of people have availed of relief. There is a big omission in terms of people whose houses have tested positively for pyrite but do not yet have damage. Who would buy such a house? What value does such a house have? That is the big omission in terms of giving people relief. There is a blight on locations until such time as people feel there is certainty about the potential damage. No engineer carrying out a structural assessment would give a clean bill of health to a house that has been proven to have pyrite. An engineer will be alert to that if an estate has pyrite in it. That is a big gap.

The inability to pay is not addressed. The rate at which people are charged if they pursue the inability to pay option is approximately 4%, when European Central Bank money is in the negative in terms of borrowing rates. That is punitive and it is very unfair that there should be some benefit to the Exchequer from people who have been able to prove an inability to pay on very tiny amounts of money. Perhaps the Minister of State would address that in his response.

It is difficult to understand the disability categories but it appears there are some positive elements to the scheme. Could a simple explanation be provided? This week we had a big exposé on fairly simple forms not being filled in. I do not know if the Minister of State filled in a tax form recently, but I helped somebody to fill one in and it was pretty difficult. In this case the form was from Revenue. The forms are complicated. Could we have an assurance that we could get them in simple English because different local authorities have different criteria? Reference was made to a cost to the Exchequer but it is the people’s money as it comes from the local property tax. I always find that language pretty odd given that it is a cost on people’s pockets.

In terms of net contributors and net recipients, the Small Firms Association and IBEC said property tax was a good thing before it was introduced because they thought it would broaden the tax base and that there would be a prospect of reducing commercial rates. Of course, they were fooled because all it amounted to was a replacement tax. Property tax is not additional. There are several major flaws. First, people are being charged for property when they are in negative equity. They are paying property tax on a debt. In terms of how the tax is distributed, a small number of local authorities are net contributors and a larger number of local authorities are net recipients. The difficulty is that there is not an equality of service. One could end up being a net contributor in a county such as the Minister of State’s county of Wicklow or my county of Kildare where there are growing populations and needs but that is not factored into the equation. Those counties are punished by virtue of the fact that their baseline was not established at a particular point in time. The needs and resources model was pretty unsatisfactory from that point of view.

If, for example, one looks at staffing levels, the staffing in Meath, for example, is 50% of the staffing in Kerry. I understand Kerry is a net contributor as well, but in Meath the staffing is 50% less. How does one provide services with a lower number of staff? In some local authorities, for example in County Kildare, there are two swimming pools. We need another swimming pool in north Kildare and I have gone on about it for years. The standard is one swimming pool for every 50,000 people and in Kildare we have one swimming pool for every 100,000. That is not factored into a cost to be maintained. If one does not have a service, that is too bad. That is a very substantial flaw if one is asking people to pay a property tax for services and there is not an equality of services for those people. It is possible to make a very clear comparison with people in other local authorities who are perhaps getting a reduction and paying less in property tax but have better services. To be perfectly honest with the Minister of State, this is a very flawed model and I have highlighted some of the flaws that are inherent in the system in the short time available to me.

What we have from the Government are some pre-election crumbs. They are not even crumbs from the Government’s own cake but crumbs from the people’s cake that the Government has taken from them in the form of the property tax. Even then, it is giving tiny crumbs of it back to them. I can see the leaflets now from Fine Gael in particular but also from the Labour Party, which is completely hypocritical considering the points Deputy Tóibín made about the arguments Labour Party councillors have made on local councils. They will target areas with higher property values explaining that Fine Gael and Labour have managed to stave off the revaluation of people’s homes, saving them a certain sum of money. I do not think people will buy that because they are not stupid. They know the Government - Fine Gael and Labour - introduced the property tax in the first place and so while they say they are saving people from yet more attacks, they did introduce this austerity tax.

On the issue of property tax, the Government is in danger of making a bad mistake of mistaking forced payment and forced compliance with the property tax with the idea of the acceptance of it. They are not the same thing. There continues to be an absolute hatred of the property tax. It is seen for what it is, which is not this talk of broadening the tax base when in reality, it hits ordinary people with yet another unfair, indirect and regressive tax. For PAYE workers and self-employed people, it comes out of the same pay packet. It is just another way of hitting them and, fundamentally, it was and is a bailout tax.

People see it for what it is and they feel increased resentment that was reflected in the opposition to the water charges precisely because of the forced compliance. The Government definitely patted itself on the back for breaking the campaign of non-payment and the boycott of the property tax. There was a very successful majority boycott of the household tax and then the Government quite deliberately handed that over to Revenue in the form of the property tax and gave it extremely draconian powers to force payment. The reality is that through doing so, it broke non-payment and forced people to pay either through stealing directly from their wages or forcing them to pay in anticipation that their wages would be robbed. People like me were forced to pay because they wanted to move homes or in my case, wanted to fulfil an election commitment I made to move into my constituency. It does not lessen my opposition and that of the Anti-Austerity Alliance or the people to the property tax. In fact, it has increased people's resentment of this tax because they feel it is fundamentally unjust. It, together with the supposed recovery that people did not see when they looked around and the nature of water as a vital resource for people, is a key reason the anger and the movement were so great on the issue of water charges. This was an issue where people knew they could fight and mobilise in massive numbers. It is a year and a day since we had 60,000 to 70,000 people outside the Dáil. In particular, the fact that Revenue would not be involved in the case of water charges, draconian powers would not exist and people would be able to boycott successfully gave impetus to what became a massive majority boycott of the water charges.

The Government has itself to thank for that in terms of the property tax it pushed through and the way it robbed the property tax from people. A total of 57% of people boycotted the first bill while 52% boycotted the second bill. I received information on foot of a freedom of information request to Irish Water that sought to get accurate payment figures. These people do not understand the word "information". It is a case of freedom of obfuscation from the point of view of Irish Water, which deliberately avoids answering the questions again and again to avoid giving the real figures because they are so damning from its perspective and that of the Government. It comes back to the opposition built up over all the austerity attacks and taxes imposed by the Government.

A left-wing Government is needed. We need to clear out the establishment parties. We need a Government that excludes Fianna Fáil, Fine Gael and Labour, that implements genuine anti-austerity policies and that puts people's needs at the heart of society rather than profit and the interests of the 1%. Some of the first actions of such a Government would be the abolition of water charges and Irish Water but also the abolition of the property tax. At that moment, if we have a left-wing Government or one that implements that policy, if there are Labour Deputies left in this House, I can imagine them screaming, as they do repeatedly whenever they are on any programme where they get an opportunity to talk about it, about how the property tax is really a wealth tax and that it is incredible that we have a Left in Ireland that is supposedly against a wealth tax - the only socialists in the world who are against a wealth tax. This is complete nonsense. A report issued by TASC a couple of days ago, entitled The Distribution of Wealth in Ireland, goes into figures relating to wealth distribution in some detail. These figures come from the CSO and Credit Suisse. There are many interesting facts in the report, one of which is that 70.5% of households own their own home. For people who own one home, it is really stretching things to describe that as wealth. It is a means of people achieving a basic human need and right, which is the need for shelter. It does not amount to wealth. It does not raise any money for them. It is simply the place where they live and it is entirely unjust to tax people's family homes.

The other fact revealed by the report is the extremely concentrated nature of wealth distribution in Ireland. The top 20% of the population own 72.7% of wealth, which is higher than the euro area average of 67.6%, while the bottom half of the population only owns around 5% of wealth. When one looks at the top 10%, the richer segment in our society, one can see that it owns most of the net wealth in Ireland at 53.8%. The top 5% own 37.7% while the top 1% owns 14.8%.

We should scrap these unjust austerity taxes and replace them with a real wealth tax. In terms of what would be raised by a real wealth tax, the Anti-Austerity Alliance has proposed a tax on net wealth in excess of €1 million. One can work that out from the Central Bank's quarterly bulletin figures, which give a figure of €601 billion for net household worth in the fourth quarter of 2014. Applying the distribution suggested by Credit Suisse to the Central Bank figures gives a total of €226.37 billion concentrated in the hands of 90,000 millionaire households who make up the richest 5%. If one allows a threshold of €1 million for each millionaire, it means €136 billion would be subject to a wealth tax and, therefore, €1.36 billion could be raised for each 1% in millionaire's tax. For example, a 2% emergency tax in 2016 could raise €2.7 billion. That is a wealth tax - a tax that primarily hits wealthy people's financial assets and other assets as opposed to people's primary single residence that does not amount to a wealth tax anywhere but in the heads of Labour Party propagandists who are trying to discredit the Left. The property tax should be abolished and we should introduce a real wealth tax.

This is not a debate about flooding. I would like to respond to some of the extraordinarily partisan remarks made by Deputy Fleming in the middle of a national weather emergency. These remarks are regrettable because many Members from all sides of this House have been working with local communities in extraordinarily difficult situations. I do not think anybody other than Deputy Fleming's party has decided to be partisan about what is a national emergency. I thank all of the agencies, particularly all of the volunteers the length and breadth of this country, who are helping communities affected by flooding, particularly those on the western and southern coasts and in the midlands. The inter-agency response has been very good. We have seen members of the Defence Forces, members of the local authorities, members of the OPW, mountain rescue, civil defence and local residents and businesspeople doing their very best to fight back the waters and the rain. We saw a month's worth of rain fall in 24 hours in parts of this country last weekend. A week on, sadly, more bad weather is on the way.

I will make a couple of points. Under the capital plan, we will spend €430 million on flood relief schemes from 2016 to 2021. That means that we will spend more on flood relief schemes in the next five years that we did in the past 20 years. This is not a partisan comment. It is a reflection of the fact that we are experiencing more adverse weather and an acknowledgement of the fact that we spent €410 million on flood relief from 1995 to 2015. We will spend €430 million on it in the next five years.

I do not live in a virtual world but the last time we discussed the Finance (Tax Appeals) Bill 2015, the Deputy stressed the importance of making information available to the public. When I point out to the Deputy and indeed the public that the Catchment Flood Risk Assessment and Management, CFRAM, website, which can be accessed at www.cfram.ie, contains significant mapping that the previous Government started and this Government finished in respect of 300 areas in this country that are at risk of flooding, something we need to do under the EU floods directive, I believe it is important to make information available to our citizens.

The most important thing is what we do with that information now. By this time next year we will have schemes devised under CFRAM whereby we will know exactly the solutions and options for each of these communities. It is important we all work together on that.

No one is going to stand in wellies and have photographs taken anywhere. Bertie is gone. That was the old way of doing things. What I have done this week, instead of rushing around the country to be seen in wellies up to my knees in water, is to work here with the Government to try to put in place a package of measures that can, in so far as possible, support people who have been affected. We have a €15 million fund, with €10 million available for households through the Department of Social Protection and its community welfare officers. In some towns and villages affected by flooding, community welfare officers are even calling to people's homes and helping them to fill out the forms. There is hardship funding, funding to replace carpets and materials and to repair structural damage. That is important.

Yesterday for the first time, I and the Minister, Deputy Coveney, announced a business relief scheme. The Deputy is right that there are people who cannot access flood insurance and who have been flooded. They need assistance to get their businesses back open. We have €5 million which will be administered through the Red Cross. The first €5,000 is effectively on an honour system. People will fill out a very simple form which will be available on the Red Cross website, hopefully today, but if not, tomorrow. People should be in a position to apply for that and I expect payments of up to €5,000 to start to be made towards the end of next week or the very start of the following week. There will be a phase two for those who have had significant damage. They can seek a further level of support of up to €15,000. They will need receipts for that and it will take longer to assess. Our priority is to get an initial payment of up to €5,000 to every business that has been affected.

On flood insurance, we have a memorandum of understanding in place between Insurance Ireland and the Office of Public Works whereby we are exchanging information. As part of the interdepartmental group on flooding, the Department of Finance is reviewing the country's position on flood insurance. That group is due to report in the spring.

We will discuss the issue of the property tax shortly, I am sure. As the Deputy knows, there is already a situation whereby if somebody's home is uninhabitable, it may be exempted from property tax. Property tax is self-assessed, based on the value of a house. If a home is flooded, its value will obviously have a bearing on the figures submitted to Revenue. We all need to work together on this. There are difficult days ahead and I work with Members on both sides of this House for the best possible outcomes for all our communities experiencing very bad weather.

I would not have minded Deputy Fleming's comment if I thought he did not understand, but as I know he understands, it does upset me. He knows very well how flood relief schemes and funding work. He knows better than many of us and has been around here a long time. He knows it is impossible to predict various stages of funding. For example, we might decide we want to put a flood relief scheme in place in Bray, a town I know well. It cannot be predicted that the contractor may go out of business and a new contractor may have to be hired. We want to put a flood relief scheme in place in Bandon and somebody takes a legal challenge. We cannot spend the money until we have the authority to go ahead with the scheme but every single cent of that funding will be spent on flood relief. I can assure the Deputy of that. More money will be spent on flood relief in the next five years than has been in the previous 20. That reflects climate change and the severe weather conditions which we are likely to continue to experience.

Some other issues were raised in respect of this Bill. It is a simple Bill and does not claim to do some of the things some Deputies would like it to do. It is not going to abolish property tax. This Government believes property tax does not have an adverse impact on job creation and does not make any apology for wanting to pursue full employment relentlessly. We believe taxes that are not based on work help to keep a positive climate in place in terms of job creation.

On the ability to pay, there are a number of provisions in place in respect of deferrals. Deputies will be aware of that. Deputy Tóibín suggested we were pandering to south Dublin Deputies. He told a very colourful story. I nearly thought he was thinking of joining the Fine Gael Parliamentary Party, he seemed to have so much detail on the various views of all my colleagues and what they say at meetings. He ignored one very big aspect. Dr. Don Thornhill wrote a report which suggested that the date be postponed. He is a very eminent former civil servant and he was the one who made the recommendation on the deferral. It is not true either to suggest that property prices have risen only in Dublin. We have seen property prices increase outside Dublin by over 14%. A revaluation may have meant that lower value homes which would, I think it is fair to say, be mostly outside the greater Dublin region, would have faced a larger percentage increase in the local property tax. The idea that this is a Dublin-centric measure might be a nice political concept but it does not tally with reality.

I take Deputy Murphy's points on ensuring exemptions are easy to access and are not tied up in bureaucracy. Measures in respect of people with disabilities that have been in place on an administrative basis since 2014 will be given a legislative underpinning. They are relatively complexity-free in that Revenue will accept a doctor's note or doctor's evidence. That is much less burdensome for a person with a disability than what was originally envisaged.

I am conscious of the need to debate the Committee Stage amendments so I commend the Bill to the House.

Question put and agreed to.