Stephen Donnelly (Wicklow, Independent) | Oireachtas source

I support the amendment. In fairness, I give the Minister ten out of ten for style - it was a good reply - but probably a bit less for substance. His reply went to the heart of the concern held across the House, one that has been echoed by his backbenchers. He stated that this was a tax on assets, but it is not. That is the problem. Let us keep using the example used by Deputy Pearse Doherty. The purchase price of a house was €250,000 and its market value is €60,000, but what is the asset? The asset is the loan, the €250,000 that the bank owns. If we are to tax the asset, let us tax the bank. In fact, the bank owns the house and the additional €190,000.

The Minister mentioned the Thornhill report and that this tax was based on it. However, the report's recommendation was not a rate of 0.18%. As the Minister knows, it was 0.1%, a little over half of what this tax will accrue. Critically, the Thornhill report recognised the issue of stamp duty, the tens of thousands of euro already paid by people, many of whom are now in negative equity and who do not own the assets on which they are being taxed. I would be pleased if the Minister considered some of the other recommendations in the Thornhill report, for example, halving the rate, recognising stamp duty and considering the asset.

The Minister eloquently deconstructed the Title to the Bill and I accept that it is a tax on property. However, I disagree with him on "local". I can use my situation as an example. I rent where I live in Greystones. I will not need to pay the tax there, although I would do so. Like other Deputies, I am paid a very good wage for what I do. I would pay the tax to Wicklow County Council because my family and I use services provided by it, but I will not need to pay.

I own an apartment - rather, the bank owns an apartment with my name on it - in Dublin. I will pay on that Dublin property, which I do not live in, and I will not pay on the property in Wicklow, which I do live in. I will pay on negative equity in Dublin. This goes to the heart of the bizarre nature of and technical flaws within this legislation. I would not have a problem with paying a local government tax in Wicklow as a resident of Wicklow who is on a decent income, but I will not be required to do so.

I thank the Minister for his reply to my question. He stated that the amendments would be dealt with, but they will not be addressed tonight. Rather, they will be dealt with as part of the finance Bill. When he mentioned the elements that would be addressed, he did not mention negative equity.

He did not mention ability to pay or regional variations either, the latter of which might, according to Deputy Olivia Mitchell, lead to revolution in Ireland.

I will conclude with two observations which are relevant to Deputy Doherty's amendment. On Second Stage of the Bill, colleagues and I spoke about the inability to pay issue and the stress that will be placed on households as a consequence of the measure set out in this legislation. We referred to people coming into constituency offices and indicating that they were suicidal because they could see no way to meet their debt obligations. As Deputy Joe Higgins observed, people in that situation will now owe an additional debt to the Revenue Commissioners. It is bad enough to owe money to the bank; one certainly does now want to be in hock to Revenue. The Personal Insolvency Bill will be of no assistance to such persons because money owed to the State or to a local authority is exempt from any insolvency process. I ask the Minister to reflect on this issue over the break, on the assumption that these provisions will come back to the finance committee or this House.

My second observation relates to the role of the IMF on the international stage. The Minister has claimed that it is a requirement of the troika that a property tax be introduced in this country. If one studies what the IMF has done in recent decades, it is clear why it has come in for a great deal of criticism. The IMF, in fact, has made a lot of bad decisions, including privatising education in parts of Africa. In that instance, people argued locally that it should not be done because children would be pulled out of school, to which the IMF responded that according to its economic models it was the right thing to do. In other words, it was theoretically the correct action to take. The outcome, however, was that children were indeed pulled out of school because their parents did not have the money to meet the theory. Reality and practice simply did not align. Theory is all very well for steady state economies that can afford to adhere to a model which demands that the revenue base be broadened and local services improved through such measures as a property tax. In an economic crisis situation such as we are currently experiencing, however, theory will not suffice. The problem is that the IMF has been guilty time and again, all over the world and for several decades, of enforcing theoretical solutions to crises. What is happening here seems to me a case of more of the same.

In 2008, ironically, the IMF was running out of money as a consequence of the global boom. Its leaders came to Harvard Kennedy School at that time and offered a full mea culpafor its past mistakes and undertook to change its ways. The problem from their perspective was that suddenly there was no money to send their children to private school in Washington DC. That sounds flippant but was actually the case. The IMF was running out of money because it could not lend to anybody, which is how it pays for itself. Its representatives claimed to have learnt from the past, but we can see now that they did not.

I do not accept that the Minister is obliged by the agreement with the troika to introduce this tax, but I absolutely accept that the IMF is supportive of it. It is, according to its own theoretical models, the correct action to take. I conclude by asking the Minister again to reflect during the break on the points raised in this debate, namely, the inability to pay issue, the stress on households and the fact that the IMF gets it wrong most of the time when it applies theory to crisis. That approach simply does not work.

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