Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

Yesterday two truly shocking documents landed on my desk. They also landed on the desk of every other Deputy in this House and those of Senators. The first of these documents includes the Central Bank's residential mortgage arrears and repossessions statistics for the third quarter of 2012, while the second is the Society of St. Vincent de Paul’s response to budget 2013. Anybody who is considering supporting the Government's family home tax should read these two very short reports. When they have read them, they should ask how the Government expects families that are already struggling to get by and pay their bills will be able to pay the so-called property tax next year and in subsequent years.

The figures contained in the Central Bank report to which I refer reveal that a one in every four mortgage holders is in distress. When one adds those who are in arrears and whose payments have been restructured, one discovers that some 179,370 homeowners were unable to pay their mortgages at the end of September. That is a massive number and it continues to rise. Between July and September, 115 new families fell into mortgage distress each day. As a result of this, the current position is that 23.5% of all residential mortgages are in distress. If the Bill is passed, these are the individuals the Government will expect to pay the family home tax. One out of every four people with mortgages cannot meet his or her repayments and the Government expects him or her to pay a new tax on his or her home. That does not make sense.

The Society of St. Vincent de Paul report states "Budget 2013 once again placed the heaviest burden onto the shoulders of people who are struggling" and that "those who have already borne the brunt of cutbacks are unable to take any more". It details four case studies of how the budget will impact on the household incomes of four typical families. It shows how cuts to child benefit and the back to school clothing and footwear allowance, the increases in prescription charges, carbon tax and motor tax and the introduction of the family home tax will leave many of the State's poorest families worse off by up to €1,000. These are the people the Government expects to pay the family home tax if the House allows this measure to be enacted.

When one reads the reports of the Central Bank report and the Society of St. Vincent de Paul consecutively, one can only reach a single conclusion - that, thanks to the measures introduced by Fine Gael and the Labour Party in the budget, 2013 will be the worst year of the mortgage crisis to date. Next year is the one in which the Government wants to introduce a family home tax. Are those in government mad? Have they lost their senses? Do they not understand what the reports to which I refer are telling them? One in four of the people about whom I have been speaking cannot pay his or her mortgage. This means that there is a risk that they could lose their homes. Instead of developing solutions, the Government is now asking them to pay tax on their homes at a time when they cannot meet the mortgage repayments on those homes. That does not make sense. The Government is failing to understand the extent to which ordinary people will be unable to pay these new charges.

As Deputy Michael McGrath stated, when Fine Gael and the Labour Party were in opposition, their views on this matter were very different. In 1994 the Taoiseach opposed the introduction of a property tax and stated, "It is morally wrong, unjust and unfair to tax a person's home." I agree. During the most recent general election campaign the Tánaiste, Deputy Eamon Gilmore, promised not to introduce a property tax on residential homes and stated, "We have to remember that many people have already paid a property tax on their residential home." In this regard, he was obviously referring to stamp duty. Many paid over tens of thousands of euro in the form of stamp duty, but the Government does not care about this. It wants to hit them again, even though they have already made their contribution. During last weekend's edition of "The Week in Politics" we received an insight into Government thinking when the Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, commenting on broken promises, stated, "Isn't that what you tend to do during an election?" It is clear that neither Fine Gael nor the Labour Party ever had any intention of living up to the words they had uttered during the election campaign. There is only one thing I can say about this matter - those in the parties to which I refer are absolute hypocrites and were completely cynical about what they said in order to get into office.

The House is now debating a proposed tax on the family home introduced by Deputy Eamon Gilmore and the Taoiseach, Deputy Enda Kenny. The proposal is not a property tax. A real property tax would include all assets and stocks and shares. It would include homes, land, yachts and art collections. It would be a tax on wealth. However, this Government is not in the business of taxing wealth or the wealthy. It is in the business of taxing those who are least able to pay. In many cases and for many people, this will be a tax on a liability, on a debt. The family home tax seeks to impose a charge on every single family home in the State. There are no exemptions for the one in four mortgage holders in mortgage distress. There are no exemptions for the hundreds of thousands of mortgage holders in negative equity. There are no exemptions for the tens of thousands of mortgage holders who paid tens of thousands of euro in stamp duty during the boom. Yet Fine Gael and Labour have decided that these are the people who must pay more. The Government has also ignored the advice of its own expert group - social housing, local authority housing and voluntary association housing are to be liable to pay the tax. There is little doubt that local authorities and housing associations will feel compelled to pass on this extra charge to their tenants. Therefore, tenants who do not even own their own homes will end up paying the family home tax by the back door in the form of increased rents.

Some Deputies and Ministers, particularly in the Labour Party, argue that the family home tax is progressive, that it is the kind of tax that left-wing politicians should support. Nothing could be further from the truth. I heard the Minister for Finance make the claim that left-wing politicians support a tax on assets. Perhaps the Minister might riddle me this. If I have debt on my asset which is my home, of €300,000 and my asset is only worth €200,000, can it be called an asset? Is it an asset or a liability? Deputy Peter Mathews, the banker, might be able to give the answer. It is clear in such a case that the Government is taxing a debt or a liability.

This Bill is very clear that we all must pay, irrespective of our ability or income. There are no exemptions for those on social welfare, no exemptions for those living in or at risk of poverty, no exemptions for those living in or at risk of poverty and no exemptions for those living with unsustainable debts. The only facility provided for those who will be unable to pay is to seek a deferral of the tax. This measure is available only to those on the very lowest of incomes, at €15,000 per year for a single person and €25,000 per year for a couple. Even in these cases the Government has decided to punish people. A person who cannot afford to pay and who successfully secures a deferral, will have to pay an interest penalty of 4%. Even worse, if a person cannot afford to pay and is unable to secure a deferral, the Government will charge an interest penalty of 8%. One of the most shocking elements of the legislation is the proposal to deduct the family home tax at source for those unable to pay. Extensive powers are given to the Revenue and to various Departments to have the family home tax deducted from a person’s wages, from social welfare payments, pension payments, farm payments and other State payments. No consideration is given to the impact such deductions could have on the financial stability of the household. What if a deduction at source were to push a family into poverty and with it the children in that family? What if a deduction at source were to leave a family without food or a pensioner without heat? The legislation is silent on this. The Revenue is not required to take such matters into account. All Fine Gael and Labour care about is making people pay – even if paying means going without food, heat or other essentials.

This is a bad and deeply unfair tax. It is unworkable and will be the cause of hardship for hundreds of thousands of families. While the Taoiseach and Deputy Eamon Gilmore are clearly happy to break their pre-election promises, it is not too late for the backbenchers opposite to take a principled stand.

Fine Gael and Labour are not the only parties guilty of hypocrisy on the issue of the family home tax. The leader of Fianna Fáil and its spokespersons have some cheek to argue against the Government’s proposal. We all know that if Deputy Micheál Martin and his Fianna Fáil gang were in government, this tax would have been introduced this year. The Fianna Fáil Government had included it in its four-year plan before the troika even arrived on our shores.. We all know that Fianna Fáil negotiated the first memorandum of understanding with the troika. That agreement contained a clear commitment to introduce a property tax for budget 2012 as part of a revenue-raising package of €1.6 billion. Indeed, Fianna Fáil’s pre-budget submission last year included a proposal for a property tax to the value of €120 million. Ever the opportunists they are now opposing the very tax they proposed and advocated. Fianna Fáil Deputies say this is the wrong time and the wrong tax. The only wrong time for them is that they are not sitting on the other side of the House so that they could implement it with relish.

Fianna Fáil Deputies argue that this is the wrong time to introduce such a tax because of the mortgage crisis. There was a mortgage crisis in 2010 and in 2011. This crisis did not fall out of the sky last night or the night before or even in the last six months. Was Fianna Fáil not aware that hundreds of thousands of families were struggling under the weight of the economic crisis created by Fianna Fáil and the four austerity budgets introduced by the party? Fianna Fáil bumped up and fuelled the property boom in order to bail out its developer friends. Did the party not know that this would end in tears, as Morgan Kelly and others warned even before the crisis happened? There is never a good time to introduce a property tax. There is no doubt that if Deputy Micheál Martin were Taoiseach he would be faithfully implementing the troika agreement negotiated by the Cabinet of which he was a part.

Sinn Féin has consistently argued and campaigned against the introduction of a tax on the family home. We have also proposed credible alternatives which would allow the Government to raise the revenue it needs in a way that does not punish struggling families or hurt the domestic economy. Last month I published a wealth tax Bill. My proposal is for a real property tax, a tax on all personal wealth. There are two key tests for any new tax measure: whether the tax is fair and whether people will be able to pay it. Sinn Féin’s proposal meets both of these criteria: the Government's proposal meets neither.

Across Europe, countries struggling to reduce deficits and to raise revenue for investment in public services and job creation are turning to what are truly wealth taxes. France, Sweden, Norway, Finland and Iceland successfully operate wealth taxes. In France, the socialist government has recently strengthened its existing wealth tax legislation and expects to double its yield next year. In Spain, the conservative government has reintroduced its wealth tax. In Germany, SDP, the leading opposition party and sister party of the Irish Labour Party, has drafted wealth tax legislation with a promise to introduce it if the party is successful in next September’s general election. In Britain, the Liberal Democrats is currently advocating the introduction of such a tax. Wealth taxes are fair, they can be implemented and they are good for the economy. Sinn Féin’s wealth tax proposal is based on aspects of the taxes currently in operation in France and Sweden. The family home tax takes no account of people’s ability to pay. Sinn Féin’s proposal would levy a 1% tax on those with net assets in excess of €1,000,000. The family home tax will place a significant burden on the Revenue.

Sinn Féin's wealth tax would be self-assessed and apply only to those with considerable wealth. It would, therefore, be cheaper to administer. The family home tax is on the gross value of the property, whereas, with Sinn Féin's proposal, all debts and liabilities would be taken into account.

There are almost no exemptions from the Government's family home tax, but Sinn Féin's proposal includes a considerable range of exemptions. The family home tax ignores the fact that there will be those who are asset rich and income poor. Sinn Féin's proposal, by contrast, includes safeguards for such cases.

The family home tax is designed to hit 1.9 million homes, irrespective of the financial circumstances of the families therein. Sinn Féin's proposal targets only those who can and should pay. The Government's proposal is unfair. It will push families deeper into financial hardship, debt and poverty and imake the mortgage crisis worse.

The Government's proposal will also hurt the economy. It will take money from those who are keeping the local economy alive. By taking money out of the pockets of those who spend all of their disposable income on local goods and services, the Government will further damage domestic demand. Jobs and tax revenue will be lost and the economy will suffer. The family home tax is bad for citizens, society and the economy. Sinn Féin will oppose it at every stage as it makes its way through the House. If it is introduced, we will campaign for its abolition.

The Government parties, when in opposition, promised that they would not introduce this tax. Once again, they have done a U-turn. It is not just a question of the Government's political shenanigans in the House because it is failing to understand people simply cannot afford to pay the tax. It is impossible for large sections of society to pay. Giving the Revenue Commissioners the power to dip into people's pay packets or social welfare payments is absolutely appalling.

I am sure the Minister of State and his colleagues have received letters of the kind I received in recent days from people suffering under the weight of the budgetary measures introduced thus far. Asking them to pay more is not acceptable. They simply cannot do so. I appeal to the Minister of State, even at this late stage, to consider other revenue generating options. The proposal will yield approximately €500 million in a full year. When one gets rid of the non-principal private residence tax, it will yield approximately €420 million. Sinn Féin has a proposal in this regard that was costed by the Department, that is, unless the Minister of State is willing to say his officials and the Minister for Finance are lying. Our proposal was-----

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