Gerald Nash (Louth, Labour) | Oireachtas source

I am pleased to have the opportunity to speak on this important Bill. As social democrats and a social democratic, left-of-centre party, the Labour Party supports the principle of a tax on property. When it comes to taxes on assets, some who claim to be of the left cannot find it within themselves to support a modest charge on property for the running of local services. I find that position incomprehensible and indefensible. In my view, people should not get to credibly call themselves socialists or social democrats if they fail to pass this test. Taxes on wealth are a central tenet of left-wing thought on mainstream economics and whether we like it or not, all the evidence tells us that a very serious quantum of wealth in Ireland is held in assets. It is not in cash or income from employment and enterprise but in assets, and those assets include property. It is normal everywhere for taxes to be collected against the objective valuation of the asset that people call their home. What the Irish local property tax system provides for is a relatively small charge, with compliance rates of about 95%. Opposition to the principle and operation of the local property tax from the likes of Sinn Féin is just not credible when it levies, and is happy to collect, multiples of the local property tax to run what are regarded as generally good local authority services in the North. We have seen very peculiar alliances emerge on local authorities, sometimes between Fine Gael, Fianna Fáil, Sinn Féin and People Before Profit, which are parties right across the political spectrum, demanding cuts to the local property tax that would impinge on local services.

More often than not, parties like the Labour Party, the Social Democrats and the Green Party acted as the adults in the room. This is a fair tax and the definition of progressive taxation in that the more the asset is worth, the more you pay. That is as it should be. There cannot be progressive taxes on wealth if property is excluded. That does not work and it does not stand up to the thinnest of scrutiny.

If the pandemic has taught us anything, it is that it is the State, working with others, to which citizens look to deal with the big issues of our time. The pandemic has also exposed some of the weaknesses and gaps in the local community services that are operated by local authorities and others. People have a better understanding of those gaps now. They have a better understanding of how local parks and services need to be improved and that all of this has to be paid for through a sustainable local income source that is democratically controlled at local level. As matters stand, less than 10% of all public spending in this country occurs at local level. This compares with an EU average of 23%. In Ireland, we famously have a centralised form of government and decision-making. Few powers are available at local government level. Until it is decided to allow local authorities to raise more revenue and take responsibility for more services, as is the case in the UK, local government will continue to be a form of local management and administration, not local government in the widely understood sense of the term.

The Bill before us is a long overdue series of reforms to the local property tax system. We in the Labour Party support the thrust of the Bill and will propose amendments to sections that we believe require some attention from the House. It is good that the post-2013 exemptions from the local property tax are to be removed. There is no longer any justification for that measure to continue. It is also welcome that the Bill provides for an exemption to those who are affected by the serious mica problem, similar to the exemption provided for property owners affected by pyrite. That is to be acknowledged.

It is also positive that local authorities will, from a point in the near future, retain all of the local property tax raised in their administrative area. This is an important measure to make the local property tax and the link to local services much clearer. I am glad that solidarity will continue to be shown with local councils in areas that benefited from the equalisation fund. We are one country after all and economic transfers are an important and well-established feature and instrument of public policy. The Minister made it clear earlier that there are some issues to be worked through in that regard between his Department, the Department of Public Expenditure and Reform and the Department of Housing, Local Government and Heritage. The legislation also provides for cases where investment funds are leasing properties to councils or approved housing bodies, AHBs, for 20 years or more. In that case, it will be the lessor which picks up the local property tax tab, not the council or the AHB. This is an important protection for local councils and voluntary housing groups and means the tenant will be protected from having to pay.

The current system of local property tax was based on self-assessment. When this Bill is enacted there will be an obligation on the liable person to make a return to Revenue. Where someone is found to have taken steps to undervalue a property and, therefore, reduce his or her local property tax liability, this should be treated as a form of tax fraud and attract serious penalties and sanctions. The ability of a liable person to defer his or her local property tax liabilities under certain defined circumstances has assisted a great many people, especially some older citizens who may, on the face of it, be asset-rich in terms of the value of their home but may in reality be cash-poor.

I note that the deferral thresholds are being amended for single liable persons and for those who are married or cohabiting. The economic picture has changed considerably since the dark days when the tax was first introduced and wages and incomes have thankfully risen since the system was first devised. My assessment is that the thresholds could be raised to a higher level. They could be raised to just below €22,000 for a single person, which would be the gross income of one worker on the hourly rate of the national minimum wage who is employed full time. Will the Minister apprise the House of how the thresholds were devised? Why is the threshold for a single person pitched at €18,000 and not €20,000 or €22,000? I note from the 2019 local property tax review that consideration was given to moving the threshold for deferral up to €20,000 for those who are aged 80 or over and live alone and those who have a long-term illness or disability and live alone.

I also ask the Minister to take another look at the position with regard to the provision around the adjustment for mortgage interest, which stands at 80%. We will propose an amendment on Committee Stage that the system should not be wound down but retained and the 80% figure should be increased to 100%. The new bands are pitched about right but more can and should be raised by adjusting the planned 0.25% levied on properties worth over €1.05 million to 0.3% and the 0.3% levied on homes worth over €1.75 million to 0.4%. Again, we have proposed an amendment in this regard and I will make the case for it on Committee Stage tomorrow. I am also wondering why the interest rate for those in receipt of the State pension who defer will be a punitive 3%, albeit down from 4%, and not the European Central Bank, ECB, lending rate, which is much lower. The deferral is only available to those who meet strict thresholds and are, by any stretch of the imagination, less well-off and in many cases experiencing poverty or relative poverty.

This Bill should not be the end of the matter. We can and should deploy the tax system to raise revenue for services in a fair way and disincentivise residential property owners from sitting on properties that are vacant and not in use and watching their value go up all of the time. We need to get a clear picture of where those vacant properties are. This new legislation, and regulations around it, will allow the relevant Departments and the Revenue Commissioners to do just that. We know from previous analysis from the Business Postthat large build-to-rent developments such as Clancy Quay and Capital Dock, which are not far from here, are not fully occupied. This is a scandal at any time but especially so at a time of such acute need for so many. My colleague, Senator Moynihan, and I have repeatedly made the case, as have others in the House, for a vacant homes tax. There is an urgency around this kind of reform and I hope the Minister will bring such reform to the House for a full debate as a matter of urgency. That should be his next move.

See this speech in context