Dr. Miche?l Collins:

I will come in on the property tax issue, for the Deputy. First, when money comes from the Central Fund, it does not just come from income tax. It comes from income tax, which is progressive but it will also be coming from the other big area of taxation, namely, consumption taxes, which are regressive. There are also other tax sources. We should also remember that income tax should not pay for everything. One of the best comments I have heard around that was by economist, Colm McCarthy, I believe, who made it when speaking on this topic some years ago at a seminar where he said, rather succinctly, that the idea of a local property tax was that it was not a tax on income but was one on houses. We were taxing something different, which is the logic of it, which is that it should be falling on houses and not necessarily on income.

It is not intended to be completely progressive. It does a reasonably good job at progressivity although I accept that there are some deviations, in particular, between people who are income-poor and asset-rich. One critique I have of the system is that we do not use enough deferral options and they are not made available enough to people who may need them and who cannot pay. The State should be able to absorb those and for the liability to arise either from estates or from transfers, when they arise.

This could become more progressive and there is potential for reform to enhance the progressivity of it. We should not stop trying to look at that either. I hope, over time, that this is the direction in which we will go. One of the discussions which we also had in the Deputy’s absence was on how I would have hoped that over time, as the local property tax revenue would increase, that this would bring further strength to local democracy, as well as further debate at local level on how we are using these resources, why we are collecting them and what the best way is to spend them in our local area to benefit that area. Currently, that debate tends to be much more dominated by commercial property interests rather than by household interests.