Fergus O'Dowd (Louth, Fine Gael)

I did not interrupt the Deputy and I ask him to afford me the same courtesy.

In addition, all persons in receipt of a subsidy from the Health Service Executive on account of their inability to pay their mortgage - there were some 18,000 in that position at the last count - will be exempt. In the case of home owners living in what are deemed to be unfinished housing estates - there are some 1,200 categories of estate listed in the Department's report - none will be eligible for this charge. Each of these estates will be listed by the Minister, Deputy Hogan, early in the new year. To reiterate, there are significant exceptions to the payment of this charge. Moreover, section 12 of the Bill makes clear that local authority managers throughout the State may examine individual applications and, where there is evidence of extremely difficult circumstances, choose to waive part or all of the charge.

The household charge is being introduced out of the necessity to ensure local authority services are funded in a sustainable manner, to close the gap in income and expenditure in the national finances, and, ultimately, to ensure we meet our obligations under the EU-IMF programme of financial support for Ireland. My colleagues in the Labour Party received no answer when they asked Members opposite what they envisage happening if we do not honour our commitments under that programme. The reality is that we would have to find some €18 billion immediately in order to close the gap between expenditure and taxation. That would lead to an absolute devastation of our social infrastructure, including health, education and social services. That is why we must raise this money.

In the time available to us since taking office, it has not been possible to design, legislate for and implement a comprehensive, valuation-based property tax. Therefore, the household charge is being introduced as an interim measure. It is preferable to the alternative of rushing through a poorly designed or badly implemented property tax in order to meet the troika timeframe. The Minister, Deputy Hogan, will establish an expert interdepartmental group early in the new year, tasked with designing a property tax that is equitable and builds on previous work carried out in the area. The group will consider the modalities of the tax, including its scope, assessment criteria, exemptions and waivers and the means by which it should be paid and collected. There will be an opportunity for input into the deliberations of the group, which will report back to the Minister by mid-2012. At that point, the Minister will revert to Government with proposals for consideration.

Many of the Members who contributed to the debate cited their concerns about inequity in the imposition of the household charge. Much of that criticism has been framed as if the Government was entirely unaware of or unconcerned by equity issues. This is simply not the case. It is precisely because of its concerns in this regard that the Government is taking the time required to ensure the property tax, when introduced, will be as equitable and as fair as possible. It is for this very reason that we are introducing the household charge as an interim measure. Equity will be to the fore of the deliberations of the expert interdepartmental group. In the context of the property tax framework, the Government will ensure that fairness and the implications for personal income levels, employment circumstances and property values are given full consideration.

The introduction of the charge is also necessary to ensure that local authorities across the county will not have to curtail local service provision radically next year. As part of the budget announcements last week, Deputies were informed that Exchequer funding to the local government sector in 2012 has been reduced by €164 million over the 2011 level. This was an unavoidable measure to help close the gap in the public finances. It is also the latest in a series of reductions which have already seen funding for local authorities' day-to-day expenditure cut by some 21% between 2008 and 2011.

Even as an interim measure, I accept that the introduction of the household charge is an additional cost to households. I acknowledge that the description of the charge as relatively modest may be difficult for some to digest. This description in no way underestimates the daily financial pressures faced by many households. I assure Deputies that, at €100, the charge has been set at the lowest possible level consistent with raising the required level of funding for local authority services in 2012. In order to ease the burden, the Minister has provided that the charge may be paid in four instalments of €25 over the course of the year. I am satisfied that many of the most vulnerable groups in society are either exempted or entitled to a waiver. In response to Deputy Niall Collins, I confirm that full waivers will be provided for those in receipt of mortgage interest supplement and those residing in certain unfinished housing estates on the liability date. For the reasons outlined, I hope Deputies from all sides of the House will support the passage of the Bill.

We all know only too well that our economy, especially our tax revenue, has been overly reliant on activity in the construction sector. The decline in the yield from transaction taxes such as stamp duty, capital gains tax and value added tax on property has been a major factor in the imbalance in the public finances. The necessary correction is sharp and difficult and, unfortunately, further corrective actions will be required in the coming years. We will not stand back from what must be done, but we will do it as fairly as possible. The introduction of the household charge on residential property is one of the measures that must be taken to close the gap between expenditure and revenue.

However, it should be seen as more than simply a measure to raise revenue. In addition, it is a structural change to the State's revenue-raising system which provides an alternative revenue stream that will not be subject to the volatility associated with transaction-based property taxes. In addition, the household charge represents a new local source of funding for local authorities and reduces their dependence on central government.

It has been said that the ideal taxation measure is one that is equitable, simple and flexible. The Local Government (Household Charge) Bill 2011 meets the criteria of simplicity and flexibility. The charge is simple and cost effective to administer and will be simple to understand and comply with. It has the flexibility to cope with varying economic conditions while maintaining a stable yield. I look forward to a high compliance rate when it is introduced in the new year. That is in everybody's interest. I thank the Deputies opposite and those on the Government side. Second Stage has given rise to an interesting debate and I look forward to its continuance on Committee Stage. I commend the Bill to the House.

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