Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputies for the different points made here this evening. I will respond to some of the questions that were asked and charges made about this tax. Speaker after speaker from Sinn Féin stood up and made the point on one hand that this tax should be abolished and then on the other hand argued that the county they represent does not get enough revenue from the tax they want to abolish. It is quite the position to hold to say they want to get rid of a tax and then also say they do not get enough from the tax as it is currently implemented. It is not at all surprising. Sinn Féin claims it wants more homes to be built and local authorities to have more power and get more money, but when there is a tax that is designed to support local authorities and make money available to them, Sinn Féin wants to abolish it.

Many Deputies also expressed their concerns regarding the affordability of this tax. Of course I understand that and appreciate that there are many people paying the local property tax at the moment for whom this is a very difficult bill to pay. It comes in at once.

It is a bill that can cause a lot of concern and there are many whose income does not bear relation to the value of the home they are in.

It is exactly because of all of these concerns that we have made such changes to the local property tax regime. We have widened the bands, we have cut the rate and we have changed the entry bands of the local property tax, particularly conscious of the impact that a change in local property tax valuations can have on homes that have a lower market value. We have put all those changes in place to try to change the local property tax in a way that is as affordable for many as is possible but at the same time, preserves the tax revenue that is coming in that everybody in this House wants to spend. We need to do this because if we want to ensure that local authorities or Government have the ability to deliver more and better public services in the future, we need to have the ability to pay for them.

I heard many Deputies make the charge that the Government is trying to punish people with this tax and they have questioned the mentality that we have behind this tax. I even heard one particularly pathetic comparison between the motivation behind this tax and those who were involved in the foundation of our State. I would have thought that Deputies would be able to understand the case that if a country wants to have a certain level of public services and look after our people in the way we want, particularly our most vulnerable, we need to collect taxes to be able to pay for it. With any tax such as local property tax, making changes to it or amending it is always difficult.

We are at a point where this is a revaluation that has been deferred on three separate occasions. Were the change to be deferred for another occasion, it would mean we would end up with more homes being built that are not paying the local property tax, which means more local authorities would have to provide public services for those homes that are newly built and that we want to see more of built in the future. However, those homes are not paying the local property tax whereas the houses and apartments beside them that were built a number of years ago are. That is an issue we need to change. With the changes that are happening in this local property tax Bill, we will change that to ensure that as a home is built and then purchased, shortly after that it moves into the local property tax valuation net. Again, this is with the objective of raising the money that needs to be collected so that it can be spent in local communities and used to deliver the services this House is in favour of.

One particular theme which came up throughout this debate was the definition of residential property. I want to clarify exactly what is contained in the Bill. The Bill provides for the amendment of the definition of residential property. In particular, it sets out that the part of the adjoining land to be valued with the house where the land exceeds 1 acre will be specified to be that part that is most suitable for occupation with the house. The chargeable value of a residential property for local property tax is based on the following: the house itself; any associated buildings or structures, such as sheds and garages; and any adjoining outdoor areas, such as yards and gardens. However, where the area occupied by the elements other than the house exceeds 1 acre, it is only the area up to 1 acre that must be valued. This applies to all residential properties, irrespective of whether they are located in a rural or urban area. This is the position and amendments to the definition of residential property do not change this treatment. The change in the definition of residential property does not change how such areas or properties are taxed. There is a change where we are changing "area" to "hectare". This is being done to make this definition consistent with other parts of our tax law.

Overall, this is a change that seeks to ensure that the local property tax is placed on a solid footing for years to come by ensuring that as a home is built and purchased it is moved into the local property tax base so that house or apartment can make a contribution to the funding of local services in the future. When these changes are made this tax will be raising €540 million to €560 million, which is much needed revenue, to make a contribution to the public services our citizens need.

Through changing the tax bands, the rate and the entry point into the local property tax structure, we have tried to get the balance right between broadening the tax base and generating a bill that is difficult for many but is as affordable as is possible. If this revaluation was to be deferred for a fourth time, these challenges would only get bigger and it would become even more difficult to get the balance right between affordability for individual apartment and house owners and the need to try to bring in enough revenue to make a contribution to the public services that those who own and rent these homes also deserve and want. For those reasons, I commend this important Bill to Dáil Éireann.

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