Caít Keane (Fine Gael) | Oireachtas source

I welcome the Minister of State to the House. I agree in principle with the application of property tax in Ireland because nearly all developed countries have some form of property tax. It is an internationally accepted way of funding local services. I will refer to the application of funding of local services later.

A local property tax is a steady source of income for local authorities in most countries. The introduction of a property tax is in compliance with the memorandum of understanding of the EU-IMF programme. It is part of a number of measures being brought forward by the Government. The introduction of the tax is an opportunity for real political reform at local level. Local property tax will provide a stable funding base for the local authority sector. It is an introduction and we must crawl before we walk. We must start somewhere and we cannot implement all the measures we would like on the first day. It is a reform at the level of local government. It will strongly reinforce local democracy and decision-making and encourage greater efficiency by local authorities on behalf of their electorates. Not everything will happen on the first day.

A notable feature of the Irish taxation system in recent decades has been the absence of a residential property tax. I will not go over the comments of Senator Hayden on the history of rates. The flat charge of ¤100, regardless of the value of the property, was a blunt instrument and an unfair application of property tax. It had to be implemented temporarily to try to redress the appalling financial situation. Any attempt to say this was a fair way of implementing a property tax is not real.

There is a property tax in the North of the island. I am usually shouted down when I say that because I am not comparing like with like. In addition to the tax levels in the North, there was a 10% increase this year. In Derry, a house worth ¤200,000 will pay £1,500 and a house worth ¤200,000 in Ireland will pay ¤315. We are comparing like with like because my analysis takes into consideration different services. Members have pointed out that some services are free while others are not.

Local authority houses also pay domestic rates in Northern Ireland. Members have said that, given the integration of local authority houses in private estates, there is a circulation of money. We can look at it that way but local authorities also rent houses in private estates. We have encouraged that to ensure integration of people in various estates.

It is also the case in apartment blocks, including very nice ones. This is appropriate because local authority tenants are entitled to the best of accommodation. It would be very unfair if a very low-income earner struggling to pay a mortgage and in negative equity was not funded while another individual, earning nearly the same amount, was funded. It is a question of fairness for all. The scope of the tax system must be as wide as possible in so far as it brings itself to bear on property owners. The Minister listed the exemptions. I will not repeat them; suffice it to say the provision on pyrite is very welcome. I thank the Minister of State therefor.

We cannot continue to spend money we have not got but we must get money somewhere. The budget is widening the tax base. Property remains the primary source of wealth in the country. Importantly, it is immobile and cannot be transferred out of the State. When raising income, one must ensure one protects jobs. Every other country in Europe has a property tax because property cannot be moved abroad. Ordinarily, cash can be transferred abroad with the press of a button on a computer. We now know what the deficit is. The property tax is a responsible way to raise money, particularly for local services. It is less harmful to the economy than certain other measures.

Senator Norris referred to protected houses. He mentioned Castle Leslie, a lovely castle and commercial property that hosts weddings, etc. The issue raised by the Senator would have to be considered seriously. One protected property is not equal to another. Those with protected properties who cannot afford to pay the tax will be able to avail of the deferral arrangement, at an annual interest rate of 4%.

Protected properties owned by local authorities should be subject to an exemption. Some could be very pricey. Former councillor Stanley Laing and I have been working hard in respect of Templeogue House in Dublin 6. It has a high value. There are other properties around the country owned by local authorities. Templeogue House is a protected structure and there are those who are trying to save it. There are other such buildings around the country in respect of which the tax burden should not be placed on local authorities.