Brian Stanley (Laois-Offaly, Sinn Fein) | Oireachtas source

The Bill, in so far as it goes, provides some relief, and we support it on those grounds, but why is it restricted to equal of one third of the local property tax, LPT, or €300, whichever is the lower figure? It seems limited but, however, it does provide some relief and on those grounds, we will support the Bill.

The key issue is the abolition of local property tax, which we included in our recent budget submission, in the same way that Sinn Féin councillors, whenever we were in a position to do so, supported the reduction of property tax on local authorities as an interim measure pending, hopefully, the eventual abolition of that tax.

Management fees were but one of the many extra charges imposed by developers during the Celtic tiger years. I am talking about managed developments, but it was also charged on ordinary housing estates for a number of years. When people bought their houses they were tied in to contracts under which they had to pay management fees. In some circumstances they are justified where there is a reliable security system and maintenance but as referred to by a previous speaker, it is a very difficult situation in many estates where extortionate charges are being imposed.

In many cases the developer and the management company is one and the same and is simply being used as a cash cow for the developer, while carrying out little or no maintenance or improvements in the estate. Approximately 200,000 homes are involved. In one example, an apartment owner who came to public notice was given a €2,000 management bill for, among other things, landscaping, tree-cutting and tree removal, even though the apartment block was on a street of terraced houses with neither trees, gardens nor green areas. That type of practice is taking place as well. When the person refused to pay the amount, he was issued with threats that his apartment would be removed from the block's insurance policy, and that the management company would begin legal proceedings to recover costs and an application made for the repossession of his property. That is probably an extreme example but it is clear there is a good deal of abuse with regard to management fees, and that issue should be addressed, apart from the proposal in this Bill, which I support. There are examples in Laois of people being charged up to €1,000, with little or no service being provided. There are some good examples, however, where the management company is like a co-operative in that there is buy-in from all the local residents, all of whom are active members of the management company.

Management companies were mentioned by a previous speaker in regard to Kilminchy, which is 90% taken over by the local authority. It is not run by a management company. There is a small estate adjacent to Kilminchy that is under the control of a management company but there are others also. Rankins Wood and Maryborough Crescent, in Portlaoise, are among many where management companies are involved. The crucial difference is that the residents are responsible for the lights, footpaths and green areas. If someone is living in an ordinary housing estate or on a street, the local authority is responsible as far as the step of their door but the residents in these developments are responsible for the landscaping, boundary treatment and maintenance, footpaths, roads, lights, water services in and out and everything else within the development, and there is a large cost involved.

A person living in a development very close to where I live was a little behind in paying their management fees. They happened to be a commuter who was paying a serious amount of money and another range of taxes to the Departments of the two Ministers opposite me, the Minister, Deputy Noonan, and the Minister of State, Deputy Harris. That person came out of her house one morning to find her car had been clamped by the management company. That is not the first case of that happening to someone. It took that women a couple of days to get her car released. She could not travel to work. She was caught in an awful situation. It is clear that abuses are taking place in this area.

Regarding local property tax in general, it is clear that it unpopular to impose a further tax burden on already hard-pressed citizens such as the woman I mentioned. When it was introduced by the former Minister, Phil Hogan, he claimed it was necessary to help maintain public parks, libraries, lighting and footpaths through contributing via the local authorities' Local Government Fund. In fact, what we saw last year was the Local Government Fund being raided to subvent Irish Water. It is ironic that the amount taken out was almost the same as that raised through the property tax.

Obviously, the Government has realised that property tax is unpopular and made a gesture towards that in the budget, but we are getting near the time for an election. However, the decision to freeze any increase to reflect rising property values until 2019 is only a temporary stay of execution as home owners will be faced then, or if a future Government changes the legislation or makes a move in the next budget, with a much larger jump in LPT in 2019. In any event, the Government measure has been overtaken by the fact that many local authorities had already decided to avail of the option not to increase the tax or to cut it by up to 15%.

Unfortunately, that is a double edged sword as local authorities have their funding reduced equal to the amount of the local property tax. Local authorities are faced with a situation where locally provided services are badly hit by the reductions in their funding from central government. In the case of Dublin, the yield from property tax in 2016 for Dublin City Council would have been hit by €77.5 million but the reduction of 15% would reduce that €77.5 million by more than €11 million.

Some Government supporters have argued that reducing the rate on such councils is deliberately hitting their own services. However, Fine Gael councillors, along with Fianna Fáil and Sinn Féin, all proposed motions calling for a 15% reduction so not only do all the parties agree that local property tax is too high, all of them, and many councils, implicitly support the Sinn Féin view that local authorities and local services should be supported out of general taxation and other charges. We presented options such as packaging levies, waste levies and a second home tax, which is an option; that is one the Government did away with. Instead of going for the option of taxing speculation, it taxed the family home.

The funding to local authorities has been drastically reduced in real terms over the past five or six years. As I pointed out last year, the proceeds from LPT were, in effect, handed over to Irish Water, and we know the way that is being wasted and literally being poured down the drain. Not only are households expected to pay for water through water charges, therefore, they are also hit by having the funding that was supposed to go to local services diverted down the drain to Irish Water.

Our party made a submission to the review of the local property tax before the budget. We put on record our opposition to LPT and recommended that the tax should be abolished. If elected to government after the next election, that is what we are committed to doing. In our submission, Deputy Pearse Doherty correctly pointed out that the review is intended simply to provide political cover to the Minister for Finance rather than as a genuine investigation into LPT.

He correctly stated that the Minister, Deputy Noonan, was planning to announce a freeze on the link with property prices, which of course he did in the budget. The review and the voting record of Fine Gael councillors in Dublin and on other local authorities prove that Fine Gael has realised that the local property tax, LPT, is extremely unpopular, not least among its own supporters.

Our position is that the LPT is a failed tax. It has failed in its stated objectives and is simply another unfair tax implemented with the excuse of an economic crisis. Nor does it provide any new services. With 110,000 households in mortgage distress, it is unacceptable.

We talk about negative equity. Looking at the county I live in, along with south Kildare - the Monasterevin area, Portlaoise, Mountmellick, Portarlington and towns like that - I can see that the people who have really been hit with negative equity are those in apartments. Apartment prices have literally fallen through the floor. While houses in some areas have held up reasonably well, perhaps taking a 30% or 40% hit, there are apartments that are not worth 20% of what it cost to build them. Take Parkside in Portlaoise as an example. The Minister of State should just look at what the apartments there were bought for and the prices they have been selling at over the last year or so. In some cases they are selling for a quarter or one sixth of what they cost in the first place.

We support the Bill. We would like to see the total abolition of the local property tax. In respect of previous comments on management companies, legislation will be required there because we are going to have problems with management companies down the line. They were not properly thought through in the first place.

See this speech in context