Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

Is it any coincidence that Ireland is one of the few countries in the world that does not have a non-transaction-based property tax and is also a country with one of the biggest banking collapses, one of the biggest housing collapses and one of the biggest general government budget collapses in history? Not having such a tax in place or a broad enough tax base partly explains why these three traumas fell upon our country.

Many in the Opposition have said this tax will have an impact on family homes and on families who are already under terrible strain and difficulty. Of course the Government has an obligation to provide public services to the same families. The Government must also provide for social welfare payments, schools, hospitals, teachers and nurses to the benefit of those families. It also provides money to ensure their local authorities are working properly. The Government continues to face an enormous gap between what we take in in taxes and what we spend. Until we get to the point at which the level of public services we want is paid for by the level of taxes we can bring in, those same families will continue to be under pressure, vulnerable and concerned for their future.

That is why the principles underlying our tax system are so important and must be well thought out.

I welcome several aspects of the proposed property tax, but I also have some concerns and observations that I would like to see addressed. As far as positives go, I welcome the role of the Revenue Commissioners in the collection of the charge. One of the main problems with the implementation of the household tax was that not enough people understood how they could furnish their payments and, moreover, the options for doing so were very limited. It was much easier for people to purchase refuse bags or top-up telephone credit in their local shop than to pay that tax to the State. Second, I welcome the progressive element of the new tax whereby houses valued at more than €1 million will be liable for a higher rate of payment. That is an essential element in any progressive tax system. In that regard, I also welcome the cancellation of the household charge. A flat-rate tax which bears no relation to the value of the asset being taxed is not ideal. Finally, I welcome the inclusion of a deferral system for families whose income circumstances are particularly tough.

On the other side of the coin, I have several concerns regarding the provisions of the Bill. Before setting them out briefly, I am anxious to move away from the notion which some of my colleagues have raised that the tax will mean that urban areas could be subsidising non-urban areas or particular areas in Dublin subsidising other areas in the same county. That is a dangerous path to go down. We already have a situation where the energy produced in one part of Ireland is consumed by another part of the country. Likewise, tax receipts from agriculture, for example, are spent in urban areas. I am wary of pursuing a line which seeks to split people into different categories based on the area or county in which they live.

My first concern regarding the proposed tax is that it will inevitably cause difficulty for people who purchased their homes at a very high price. In this context, I would like to see the date after which a local variation can be introduced brought forward from 2016 to give a greater recognition of the different circumstances throughout the country. Second, more should be done to ensure that funding streams to local authorities are protected. Third, it is important that income thresholds are reviewed. As our economic situation improves and tax revenues continue to grow, this is an area which should be prioritised when it comes to dispersing those dividends. Just as the collapse of the housing sector was one of the causes of the great difficulties we are now facing, we must ensure the implementation of the property tax does not add to the difficulty.

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