Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I move: "That the Bill be now read a Second Time."

The Local Government (Household Charge) Bill's purpose is to give effect to the EU-IMF programme of financial support 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, improve accountability and better align the cost of providing services with the demand for such services.

However, in light of the complex issues involved, a property tax requiring a comprehensive property valuation system would take time to introduce and, accordingly, to meet the requirements in the EU-IMF programme, the Government decided to introduce a household charge in 2012. The household charge is an interim measure and proposals for a full property tax will be a matter for consideration by the Government in due course.

The Bill is a relatively short and straightforward legislative instrument. Essentially, the majority of residential property owners in the State will be liable to pay an annual charge of €100. Liability arises each year on a point in time basis. It is expected to raise some €160 million on full collection and the revenues from the charge will support the provision of vital services provided by local authorities in our communities. Internationally, local services are administered by local authorities and financed by local service charges. In Ireland, local authorities are responsible for, among other services, fire and emergency services, maintenance and cleaning of streets, street lighting, planning and development services, public parks, libraries, open spaces and leisure facilities, etc. These essential local services benefit all members of the public, including business.

In common with all levels of government, the financial position of local authorities remains under significant pressure. At the same time, as part of the efforts to close the gap between income and expenditure in the public finances, Exchequer funding of the day-to-day activities of local authorities cannot be immune and, accordingly, the 2012 Exchequer allocation to local government has been reduced by €164 million compared to 2011. The introduction of the household charge in 2012 is, therefore, critical to ensuring that local authorities have the necessary resources to deliver services to their communities at close to existing levels in the coming year.

We had a helpful and constructive debate in the Seanad on the Bill last week and it is fair to say that most of the discussion revolved around the exemptions and waivers from the household charge. In the main, Senators advocated additional provisions to exempt more owners and properties from its scope. I am satisfied that the current provisions in the Bill for exemptions and waivers are sufficiently broad and will exclude those households in particular difficulties from the ambit of the charge. The provision of additional exemptions from taxation measures could give rise to a domino effect. Providing an additional exemption from the charge may seem entirely reasonable in itself but it could give rise to pressure for more exemptions catering for circumstances different, but not wholly dissimilar, from the original one. There could be a tendency for calls to be made for an incremental extension of exemptions to a point where the revenue stream from the charge starts to be eroded significantly. The broad applicability of the household charge has allowed us to set it at the lowest possible level for 2012 at €100. The inclusion of further exemptions or waivers would require a corresponding increase in the level of the charge and would disadvantage those households remaining liable for the charge.