Gerald Nash (Louth, Labour)

The Labour Party will amend the Bill on Committee Stage. I can assure the House that we will not amend it on the basis that we want to see what is a modest charge on properties abolished. It is extraordinary that every time we debate the principle of the property tax in this House there are parties who purport to be on the left in Irish politics which say they oppose it. They oppose it for their own reasons, and I respect that. In my view, parties are not entitled to refer to themselves as a social democratic or socialist party if they do not agree with the principles of taxes on assets. This is a modest charge. Few people like paying tax, but people are compliant. They understand the necessity of the tax and it is now an embedded feature of our political and tax-raising systems in this country.

I am always struck by the uneasy alliance of the far left, Sinn Féin and parties which describe themselves as being on the right in Irish politics, such as the likes of Independent Ireland, where people seem to agree that property taxes are something that should be abolished but rarely make sound proposals in terms of how we should replace the several hundred million euro on which we rely every year to run our local services.

It speaks to the heart of the report published a couple of short years ago by the Commission on Taxation and Welfare. It said that taxation from property and wealth is low and should increase. We know that some of the most significant forms of wealth in this country are held in property. The commission recommended that the yield from capital gains tax, capital acquisitions tax and taxes on land and property should be substantially increased. The commission also recommended a site value tax be applied to all land not subject to the local property tax. This measure was also in the Labour Party's election manifesto, but it is one this Government is yet to move on.

A site value tax as a replacement for the outdated system of commercial rates ought to be up for consideration. The commercial rates system is full of inequities and is, quite frankly, an anachronism in the context of a modern economy. The idea of a site value tax would, of course, require detailed consultation on the design and modelling of the interaction with the local property tax and residential zoned land tax.

The commission was clear on the local property tax. It called the local property tax a well-functioning tax, the yield from which should be increased materially. The commission also recommended that tax incentives should not be used in order to stimulate the supply of housing, another thing this Government seems to have contrasting views on.

I am reassured by comments made by the Minister in previous months that tax incentives in respect of the supply of housing are something that ought not to be considered. I hope that is something he will follow through on. We remember all too well the impact such forms of incentives, as they were described, had on our economy and banking system. They led, for example, to the financial crash. The commission recommended that the overall yield from wealth and capital taxes, including property, land, capital acquisition and capital gains taxes, should increase materially as a proportion of overall tax revenues. Herein lies our issue with the Bill.

We agree that working families in average family homes who are already being impacted by the cost-of-living crisis should be saved from very large hikes in their local property taxes as a consequence of rising property prices. We absolutely get the point. While the ability to pay must always be at the forefront of any tax raising system, it is clear that this country does poorly in terms of taxes on fixed assets and capital. The Bill will not do a huge amount to improve that record.

The Labour Party's issue with the Bill is with how it operates at the higher end of the scale, where there is scope for even higher yields from wealthy property owners with a demonstrably greater ability to pay. Property values go all the way up to €1.75 million before they are taxed on their actual value. Even then, the same rate is applied as any other property for the first €1.05 million of that total value. The remainder is taxed at 0.25% and 0.3%. It is fair to say that people in that category with very large assets at the high end of the spectrum are also likely to be cash rich. Wealthy asset holders get away lightly in our tax regime comparatively, while ordinary working people carry a significant load.

The local property tax is an opportunity to address that balance and use the increased yield from those with abundant resources to give working people a break, whether by using the resources we have to reduce the cost of living and invest more in public services or, over time, reduce the proportion of tax that working people pay.

A second and equally important issue we have to keep an eye on when we look to reform the local property tax is the funding of our local authorities. The Labour Party welcomes the broadening in the Bill of the discretion available to local authorities in the setting of the local property tax from 15% to 25%. This was a commitment we made in our election manifesto late last year. However, this expansion of local authority discretion, as I understand it from the remarks of the Minister, will be delayed until 2027. For this to mean anything, the Government parties, that is, Fianna Fáil and Fine Gael need to tell their council members around the country to exercise this power positively for the betterment of their local authorities and the people they serve.

It has been the experience across the country that, more often than not, representatives of Government parties in local authorities are not prepared to increase the property tax to provide additional resources to fund public services in an area or, in fact, want to reduce the local property tax. Too many times, this has led Labour Party councillors, working with Green Party, independent or Social Democrats councillors, to argue against this situation.

We also have to be careful that the core yield of the tax is not undermined to such a degree that the extra discretion makes no real difference to the funding of local authorities. We should all aim to ensure that the financial independence of local authorities in Ireland is strengthened.

A key principle of local government reform must be that councillors have greater control of their finances and more discretion for local priorities, alongside the power to raise revenue. We should also consider introducing a legal guarantee that all of the local property tax raised in a local authority is retained there, independent of other revenue streams, including from Government, and ensure that decisions of the local property tax are made at the same time as the annual council budget.

We also believe we should be providing more revenue-raising powers and more discretion to local authorities to raise revenue along the lines, for example, of proposed tourist levies, a better way of collecting vacant and derelict site taxes and increasing the discretionary level of the local property tax.

While we are looking at local authority finances, the resources generated and raised from the imposition and collection of derelict site levies ought to be improved. One way of doing this would be to pursue an approach I have been proposing for many years, which is to give the powers that local authorities have at present to collect revenue from derelict sites levies to the Revenue Commissioners. The Revenue Commissioners would then be obliged to funnel those resources directly back to the local authorities. At present, property developers and property owners who can afford to leave their sites derelict, whereby those sites appear on derelict site registers, are not taking the responsibility seriously. All too often, they are deliberately evasive when the bills hit the mat and they are simply not paying the levies. As I understand it, if the Revenue Commissioners were to collect properly all of the derelict site levies that would be available, the yield would amount to €24 million or €25 million. This is not an insignificant amount of money. The resources being collected at present are exceptionally small.

The most recent figures for LPT were published by Revenue in April 2025. They showed that for the LPT year 2025 to date, Revenue has engaged with more than 1.4 million property owners in respect of 2.02 million properties, representing a 97% return compliance rate, and €346 million has been collected to date. I will not argue for one minute that this form of taxation or any other form of taxation is popular but compliance is high and compliance is important. One of the reasons compliance is high is that the local property tax is collected by the Revenue Commissioners. Therein lies my argument for giving responsibility for the collection of the derelict sites levy to the Revenue Commissioners.

According to the Central Statistics Office, property prices increased by a national average of 24% between November 2021 and March 2025. Property prices have had a greater proportional increase outside of Dublin, with more than 30% property price growth recorded in the Border, midlands and western regions. However, average property prices in Dublin for all types of residential properties also increased by 18%. While these increases will have little or no impact on the resources available to families simply living out their lives in an average family home with no desire to sell, they are a huge boon for those wealthy property owners and property flippers who see the property market as a ladder, with rungs on which to climb and, hopefully, seeing their asset appreciate always over time. While we need to protect the first group from major hikes in the local property tax, the second group does not need this protection and, in my view, can afford to contribute more.

The Government estimates that 96% of property owners will stay in their existing bands as a result of the Bill and it will yield an extra 8% in revenue over a period when property values have risen by one quarter. In my view, all of this means we have a missed opportunity to take a greater yield from those who will ultimately profit from the boom in property prices and use that extra revenue to give ordinary working people a well-earned break.

There is some consolation in the Bill for working families and their struggles with the cost of living. The Labour Party welcomes the extension of the 9% VAT rate on energy bills but, at the same time, we continue to make the case for a greater tax take from the runaway profits of some of the energy companies that are still posting supernormal profits. Moving the threshold for deferrals of tax in line with inflation is also a welcome element of the Bill from the Labour Party's point of view. This is fair and we look forward to amending the legislation on Committee Stage when it appears before us.

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