Olivia Mitchell (Dublin South, Fine Gael)

The hot topic of the day when I was first elected to a local authority a frightening 26 years ago was the funding of local government. We have had various stabs at local charges and taxes over the years, none of which stuck, even though local charges or taxes are regarded as the norm internationally. This is not only because they broaden the tax base and make the Exchequer less dependent on a narrow range of what may be quite volatile taxes, but because they are good for services, good for consumers and good from the point of view of efficiency and value for money. A direct financial link between the customer and the service provider ensures greater accountability. It fundamentally changes the relationship if one is paying for a service.

In normal circumstances, the introduction of a local tax such as this would be accompanied by a reduction in central taxation, and it is a tragedy that we are introducing it in circumstances in which it must be a revenue-raising tax. We had no choice about that, given the demands of the troika. It is being introduced in a hurry for this reason. As a household charge it will not survive because it will eventually be replaced, in tandem with the non-principal private residence tax, with a property tax.

The real tragedy is that we did not have a property tax during the Celtic tiger years, and that we ever abolished rates for private houses, onerous and dreaded as they were at the time. If there had been rates or a property tax over the last 15 years, we would have had no property bubble, no bank guarantee, no over-lending, no Anglo Irish Bank and no bailout. We would be in a very different position. A tax such as that would have acted as a brake on the madness that prevailed. However, instead of having taxes and charges to put a brake on the property bubble, we had incentives to accumulate property. Local authorities received development levies, which encouraged limitless granting of planning permission and ever-increasing densities. There is no doubt that Irish people have historically been obsessed with property and apart from the necessity of this tax now as a revenue-raising measure, it makes good sense to establish a tax that will act as a stabilising mechanism should the property madness ever overtake us again.

There are two issues I would like to raise with the Minister. Given that this tax and the NPPR tax will be consolidated into the property tax, I draw the attention of the Minister to the problems and inequities in the NPPR tax as it currently exists. First, it is not eligible for tax relief, despite the fact that it is a legitimate business expense. Second, the policy of charging per unit in converted houses is unfair; for example, the owner of a house that has been converted into five small flats pays five times the charge levied on the owner of the house next door which is also rented out but as a single dwelling. I ask the Minister to consider, for the remaining years of this tax, at least putting a cap on the total amount of tax that can be collected on any one property. For example, if an owner is currently paying a NPPR tax of €1,000, maybe it could be capped at €600, or something similar.

The method of payment for this new charge will be similar to the method of payment for the NPPR tax, which is efficiently and effectively managed by the Local Government Management Services Board on a shared basis for all local authorities. At the moment, however, it is completely inflexible. If I send my cheque in late without the penalty, it will be sent back to me. People are beginning to accumulate debts because there is simply no tolerance at all in the system. This is too draconian for a tax which, after all, people do not get a bill for. It is a self-assessed tax; one does not get a bill or a reminder, yet if one does not pay, one is charged a penalty which must be paid. These are difficult times for people and, unlike the non-principal private residence, NPPR, charge, this charge will be paid by people in a variety of circumstances. The elderly, infirm, redundant and bankrupt will be required to pay it. Although I accept that they must pay their taxes, the collection system should facilitate easy payment, rather than make it difficult and have such inflexibility that it is almost impossible to pay, as a result of which people accumulate huge debts very quickly.

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