Robert Dowds (Dublin Mid West, Labour) | Oireachtas source

I welcome this amendment to the Finance (Local Property Tax) Act 2012 because it improves several aspects of the original legislation which came before the House before Christmas. The Bill provides for all local authority houses to be valued at the base rate, which will save those living in urban local authority housing hundreds of euro each year. It provides for reductions in liability for the tax in respect of properties for which grants have been given to adapt them for use by disabled persons. The Bill also contains a provision for undervaluation of the chargeable value by somebody who intends to sell the property. I welcome the deferral clause for those in excessive financial hardship, such as those who have to avail of the Personal Insolvency Act. Will the Minister examine this aspect of the operation of the Bill? As we may see anomalies where people are severally squeezed, it is important that we return to the table to examine it again.

There are three main arguments in favour of property tax. First, it is fairer than many forms of indirect taxation such as VAT and, generally speaking, it falls more heavily on the wealthy. Second, it is a regular and stable source of funding for local authorities. Most of the world has a property tax in some form or another.

Third, the tax is jobs friendly in that it does not directly affect the labour market in any way.

I wish to address two particular issues with the tax. Although in general it falls more heavily on the wealthy, clearly there will be hardship cases, such as pensioners living in valuable properties. Earlier, Deputy Ross stated in his contribution that the price of property has gone through the floor. In a sense that is almost an argument in favour of the property tax because of the fact that people will be valuing their properties a good deal lower than they would have valued them five years ago.

Despite that local authorities will have the power to vary the tax by plus or minus 15%, a measure which will come into effect in 2015, the tax will fall more heavily on urban dwellers than rural dwellers. I am concerned that people on low and middle incomes in urban areas such as mine will be over-burdened by the tax as currently designed. Families in my constituency will be paying far more tax than families in equivalent situations in other parts of the country. It is important that hard-working people on low incomes living in urban areas are not unfairly hit by the tax. This is another area in respect of which I call on the Minister to examine carefully people's ability to cope with the tax as it is rolled out. While there is an argument in favour of urban dwellers paying more in that they get more in the way of services than rural dwellers, the counter-argument is that local services in rural areas, including, for example, roads, cost a great deal more to provide there than in urban areas. There is a balance to be struck and I am unsure whether we have it at the moment. Let us consider these two points together: urban dwellers are being asked to pay far more in tax than rural dwellers yet providing local services in rural areas is far more expensive than in urban areas. This offers a strong argument to the effect that local authorities should have the ability to vary the charge to a greater extent than 15%. This would help to ease the burden on low-income urban dwellers. Such a move would help to provide greater balance between urban and rural areas and provide the necessary income to provide services where they are needed.

A related point is an issue that has not yet been decided but which is most important, that is, the percentage of the amount collected which goes back to the local authority from where the money has been collected. I am aware of the suggestion that 65% should go back with 35% going into a central pot to be divided up among the rest of the country. My fear is that it runs counter to the argument that it is a local property tax if a great deal of it is going away from the local authority area it came from. The local figure should be in the region of 80%. Some redistribution of money collected in urban areas to rural areas is justifiable because urban people use rural resources but if large chunks of this money do not go to local services then it flies in the face of being termed a local property tax.

Reference was made to the concept of a local property tax as a good source of income for local authorities. I firmly support the granting of powers to local authorities to vary the rate by 15% from January 2015. In the long term it would be a good idea to look towards a position whereby local authorities have even more powers in deciding on the amount of the local property tax.

We live in a situation whereby because of our traditions and attitudes towards property there are many people in the country, unfortunately, who deeply dislike property taxes. We know that Fianna Fáil signed up to this measure and that Sinn Féin imposes high property taxes in Northern Ireland. In their different ways they are playing on this issue with considerable hypocrisy. In the long run the only way a property tax will stick is if people see it as fair and I recognise that the Minister for Finance is in tune with this point; we would not be sitting here today if he were not. For this reason, I urge the Minister to review the operation of the legislation at the end of 2013 with a view to ironing out any inequity. The possibility of paying the tax to the greatest extent possible in a manner spread over the year will make it a little easier to bear. There is also a need to let people know exactly how the money is being spent.

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