Seán Canney (Galway East, Independent) | Oireachtas source

I move amendment No. 1:

To delete all words after “That” and substitute the following:“Dáil Éireann resolves that the Management Fees (Local Property Tax) Relief Bill 2018 be deemed to be read a second time this day six months, in order to allow for completion of the Inter-Departmental review of the Local Property Tax; to enable the Government to consider the conclusions and recommendations of the review; for the measures proposed in the Bill to be costed; and for the identification of means by which the yield foregone can be made up.”.

I am pleased to speak on this Private Members' Bill tonight. I understand the Bill proposes to make provision for a partial relief from local property tax payable by a relevant owner whose property is located in a managed estate on which the owner of the property is liable to the payment of management fees. Specifically, where a liable person is obliged to pay an annual management fee in respect of a relevant residential property and the management fee is paid in full, such person would be exempt from having to pay a part of his or her local property tax in a relevant year. The amount of the exemption would be the lower of one third of the management fee, €300 or one third of the local property tax.

The premise of the Bill appears to be that people in the circumstances described are effectively paying twice for services in their estates or apartment complexes and that they should therefore receive a partial relief from local property tax. I imagine Deputies will agree with me that when we set out to consider the design and implementation of any proposed taxation measure it is important to employ an appropriate set of guiding principles. This is the approach that informed the Government strategy for the original design of the local property tax. In 2012, the interdepartmental group, chaired by Dr. Don Thornhill, examined how best to structure a property tax. Acting on the recommendations in the group's 2012 report, the Government introduced a local property tax that is designed on the principles of equity, transparency and simplicity. Under the local property tax, a liability applies to all owners of residential property with a limited number of exemptions. By limiting the exemptions available, scope is provided to keep the rate of the tax to a minimum for all those liable persons who do not qualify for an exemption. There is no specific relief in the payment of management fees but those liable for such fees may be exempt or eligible for relief from local property tax for another reason or may be entitled to avail of the deferral arrangement under the legislation.

We must have at the heart of our consideration of taxation proposals the fundamental requirement of any tax measure, namely, that it is equitable. There are two dimensions to tax equity. The first is the principle of horizontal equity, which requires that taxpayers in comparable situations should pay comparable amounts of tax. The importance of applying this principle in the design of taxation measures is self-evident. However, the proposal in this Bill would appear to be inequitable vis-à-visthe bulk of local property taxpayers who do not pay management fees. When a person pays a management fee, he or she receives services such as bin collection, maintenance of common areas and a sinking fund for any needed repairs. These are costs that those who do not pay management fees or those who live in housing estates that do not pay management fees must meet from their own means. The contention that people paying management fees are somehow paying on the double does not stand up to scrutiny. In consequence, the Bill may fail to satisfy the fundamental test of horizontal equity.

As with any tax relief proposal, it is vital to assess the likely costs involved. In the course of introducing the Bill on First Stage, Deputy Darragh O'Brien indicated that he had fully costed his proposal.

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