Mairead Farrell (Galway West, Sinn Fein) | Oireachtas source

I am sharing time with Deputies Guirke and Stanley. I welcome the opportunity to speak on this Bill. Sinn Féin is opposed to local property tax and the reasons for this are clear. The tax, as designed, is not only a tax on assets but a tax on debts, such that many people who are liable for it may have debts worth as much as 90% of the value of the property against which they are charged. This concern should not be readily dismissed as it is a real and immediate concern for many citizens.

On 6 July, the Joint Committee on Housing, Local Government and Heritage was told by Revenue that, on average, 43,000 people defer payment of the LPT every year due to inability to pay. In 2019, 50,00 homeowners deferred payment, more than 48,000 of them because they were below the income threshold. Those who do so are charged 4% interest each year for deferral. While I acknowledge that section 37 of the Bill will reduce the annual interest rate from 4% to 3%, the fact remains that the 48,000 householders who were unable to pay in 2019 were not exempt but simply deferred payment, with interest accumulating on those deferred payments every year.

Sinn Féin unapologetically flags its concern for the workers and families who see an interest bill accumulating for tax on their home, many of whom are saddled with mortgage debt or may even find themselves in arrears or negative equity. Sinn Féin is of the view that the LPT is badly designed and unfit for purpose. Instead, we favour the introduction of a wealth tax levied against assets, not debts. The issue we have with the LPT is that it does not take account of someone's ability to pay. It hits low and middle-income earners. A large number of pensioners have raised this issue with me on the doorsteps over the years. Many of them are still living in the home in which they raised their family and have many happy memories but they struggle to pay this tax and are very concerned about its continuation.

It is clear that this legislation is ill-conceived and ill-prepared, despite the Minister and the Government having had years to prepare for changes that have been signalled for some time. This is reflected in the serious flaws in the legislation. It is also reflected in the Minister having pressed ahead with the Bill against protocol and against the wishes and over the heads of the members of the finance committee, and despite pre-legislative scrutiny not having been completed. The motion was passed last week and the Minister probably heard my protest in that regard. I felt that flew in the face of good parliamentary practice, as no request for a waiver of pre-legislative scrutiny was made at the Business Committee.

When this issue was discussed at the finance committee, there was no agreement in that regard and nor was there any indication that the debate was in the offing. We had not undertaken the proper and thorough pre-legislative scrutiny we had hoped to undertake in respect of this Bill. That is poor parliamentary practice and undermines the role of the committee. According to the Oireachtas website, "One of the most important functions of a Dáil select committee is to consider Bills that are referred to it by Dáil Éireann". We want to engage in debate and in scrutinising and talking through proposed legislation. That should have been allowed to happen, but, unfortunately, we were not afforded that opportunity. Perhaps the Minister would respond to this point in his reply.

It should be noted that the introduction of a local property tax followed and coincided with a gradual squeeze on services. In that regard, the local property tax is, and always has been, intimately connected with local authority funding. Local government sources of income rely on central government transfers and own-source revenues such as commercial rates. Given that regional inequality was deepened by the financial crash and was barely recovering before the onset of the Covid-19 pandemic, fiscal equalisation has been crucial for the delivery of local services. Fiscal equalisation is essential to protect financially weaker local authorities and their communities and to correct the effects of regional inequality and the unequal distribution of sources of finance. Before the introduction of a local property tax, equalisation was achieved through general purpose grants. Those grants were determined on the basis of an historical baseline of supports. As the Congress of Local and Regional Authorities of the Council of Europe noted in 2013, "the system of distribution of grants to local governments from the Local Government Fund is not transparent and the rules have been set without consultation with local authorities". Little changed with the introduction of the local property tax. In fact, the baseline that determines transfers from the equalisation fund is based largely on the shortfall between the tax retained locally and the old general purpose grants, with little regard given to the actual fiscal capacity or expenditure needs of local authorities.

I agree with Dr. Gerard Turley and Mr. Stephen McNena of the National University of Ireland Galway, NUIG, when they argue that the current regime is not fit for purpose. This legislation will coincide with local authorities retaining 100% of local property tax receipts, thereby ending redistribution of 20% of local property tax revenue through the equalisation fund. The Minister has stated that the equalisation fund will be maintained but funded through the Exchequer, with the arrangement in place over a two-year period beginning in 2023. The Minister previously stated that he will be guided by the Minister for Housing, Local Government and Heritage, Deputy Darragh O’Brien. I hope that goes well for the Minister and I wish him luck in that regard. However, this is an opportunity to redesign the equalisation model to ensure that it is fit for purpose. In 2021, 20 local authorities received equalisation payments totalling €133 million.

As stated, the current model lacks transparency and has little regard for the fiscal capacity or expenditure needs of these local authorities in the service of their communities. This has left local authorities, even those receiving transfers through the equalisation fund, underfunded in respect of the provision of local services. Local authorities constantly raise their concerns regarding funding. Galway County Council is often concerned about having sufficient funding to do all that is needed. It is essential that the current equalisation fund and how it is distributed does not simply remain the same, with funding coming from the central Exchequer rather than local property tax contributions. Indeed, we need a new model of equalisation that, in the words of Dr. Turley and Mr. McNena, “is consistent with international best practice but tailored to the specific circumstances of the home country”. We are all aware of areas badly in need of funding. Despite the impact these changes will have on local authority funding, the Government cannot tell us how equalisation will take place from 2023.

Turning to the mica redress scheme, and everything happening in respect of mica and pyrite issues, section 18 of the Bill purports to provide an exemption for those homeowners whose houses have been affected by mica and pyrite. Does it do so? It inserts a new section 10D into the Finance (Local Property Tax) Act 2012 which states that "a residential property that has been damaged as a result of the use of defective concrete blocks in its construction" will be exempt from the local property tax. However, this will only be the case if certain conditions are met. As set out in section 18, these conditions include situations where "the property has been or is being remediated" or, under section 10D(1)(a), if "a confirmation of eligibility in relation to the property has been issued". What does "confirmation of eligibility" actually mean? Under section 10D(6), "confirmation of eligibility" has the meaning given to it by the regulations that gave effect to the current and flawed redress scheme.

In that case, applicants can only have eligibility confirmed once they have made an application to the local authority. Such applications must include an engineer’s report confirming damage caused by mica and pyrite. To spell out what that means to everyone in the Chamber and to those whose homes have been damaged by mica and pyrite, under this legislation homeowners will be required to have an engineer’s report, which costs more than €6,000, to qualify for this exemption to the local property tax. To put it another way, if homeowners whose houses are crumbling around them as a result of the mica scandal are unable to fork out €6,000 from their own pockets for an engineer’s report, they will be charged local property tax. The tax will be charged for homes that are not safe, have lost their value and will not be liveable unless a 100% redress scheme is delivered.

Can the Minister not see that this is a ludicrous and unworkable exemption? Does he also not see that requiring an engineer’s report to qualify for a local property tax exemption is also ludicrous, when that report costs several times more than the annual local property charge. It is completely nonsensical. Can the Minister also not see that this Bill, as it is drafted, will lead to these homeowners being charged local property tax as a result of the Government’s flawed and broken redress scheme? It is for this reason that my colleagues, Deputies Doherty and Mac Lochlainn, have tabled amendments on behalf of Sinn Féin so that homeowners affected by issues with mica and pyrite can apply for an exemption through a self-assessment, with the Revenue Commissioners putting guidelines in place in that regard. Once the Government has introduced a 100% redress scheme for those homeowners - which is something that Sinn Féin will continue to argue for - the Revenue Commissioners can then undertake a look-back to verify that those who applied for exemptions through self-assessment were eligible. These amendments are sensible and necessary to ensure that homeowners affected by mica are not charged local property tax. I urge the Minister, therefore, to accept these amendments from Sinn Féin in the interests of these homeowners. Section 18 applies with reference to the current redress scheme, which is only applicable to houses in areas administered by Donegal and Mayo county councils. This means that the legislation excludes homes affected by this issue in Clare and possibly elsewhere as well. Will the Minister confirm this is the case? If it is, then this exclusion must of course be addressed immediately.

I also raise another issue with the Minister because it concerns something close to my heart. While the local property tax will be impacting ordinary people struggling to get by, I am interested in hearing what the Government is doing to tackle the issue of vacant sites, which is plaguing many cities across the State. What is the Government going to do to make the vacant site levy a more effective tool to stop the hoarding of derelict sites in the middle of a housing crisis?

One of these sites, about which I have regularly spoken in this Chamber, is close to where I live in Galway city. It is a prime example of this issue. The derelict site at the former Corrib Great Southern Hotel sits at the entrance to Galway city. It has long been an eyesore at the gateway to our city and has been the site of numerous fires and antisocial behaviour. It has been a great concern to residents for a number of years. Planning permission was given to demolish the current structure in 2010 and the site was added to the derelict sites register in 2015, which is over six years ago. Yet we are still stuck here with this eyesore in one of the most prominent locations on the east side of Galway city. We just cannot afford to leave lands lying idle in Galway when young people cannot find an affordable home and there is a crisis in student accommodation and massive housing waiting lists. While the Government is hell-bent on making ordinary people pay the local property tax, I am wondering what is being done to address the hoarding of this kind of land in areas like Galway city.

The Minister has brought forward a Bill that contains serious flaws, some of which I have spoken to this evening. These flaws must be addressed as a matter of urgency. I also note that the changes brought about by this legislation will result in an increase in bills for 36% of homeowners, while workers and families who are unable to pay will continue to see their interest bill rise on payments they must defer as a matter of necessity. I reiterate that Sinn Féin is opposed to the local property tax. It is badly designed and has failed to deliver quality local services for local communities. It is a tax that charges debt, not simply assets. Given the legislation before us and the consequences it will have, I ask the Minister to address the concerns I have raised and correct flaws in what is clearly ill-thought-out and rushed legislation.

See this speech in context