Malcolm Byrne (Wicklow-Wexford, Fianna Fail)

I thank the Minister for bringing forward this legislation. The bigger debate we need to have is precisely that around the funding of local authorities. It is interesting that our debate is focusing on the question of the local property tax. The Minister will be aware that the overall budget for local authorities in the country is in the order of €6.7 billion annually.

We are here debating the 6.5% of budgetary income that comes from local property taxes. We are very unusual in a European and international context. About 42% of local authority budgets comes from central government funding and 27% comes from a 200-year-old system of commercial rates. I am aware that the Minister for Housing, Local Government and Heritage has announced a review of local government in terms of additional powers. If we are to have that in place, we need to look seriously at the funding mechanisms. In particular, the question of commercial rates needs to be addressed. A 200-year-old system which is based on the floor space of a premises is completely unfair in this digital age. Amazon is the world's biggest bookseller. As an avid reader, the Minister will be aware that Amazon will only have to pay commercial rates on its warehouses, yet the independent booksellers who are located all over Ireland will be paying commercial rates within their local communities. That is similar throughout the system. The broader question of local government funding needs to be examined, particularly reform of commercial rates and basing them much more on turnover. We already do that to a certain extent with the telecoms companies. It needs to be widened.

On the question of a local property tax, 6.5% of the overall budget is very low in European terms. I can talk about what we did when I was a member of Wexford County Council. We took a decision nearly ten years ago to go for the maximum 15% increase. A very clear provision within that was that the 15% increase would be hypothecated for social and economic development within the county. It was never going to be put into the general funds for the council. It was used to generate funding towards supporting economic activity and the redevelopment of parks. Gorey town park was a particularly fine example. It was used so that we could get leverage on loans and so on. It worked particularly well. While there was certainly opposition, which I will come to in a moment, for most householders, after a while, when they realised it was less than €1 extra per week, they accepted that payment having to be made. I am conscious others may have referred to cases in which people may be asset-rich but income-poor or may have inherited a big house, which does cause a difficulty.

It is interesting that many of those who opposed the 15% increase in LPT were among the first to get into photographs for those projects that were funded by the local property tax. We have a very unusual situation in this country. Property tax is normally regarded as a means of redistribution of income and is championed by many left-wing parties across Europe. We have the unusual situation that the populist Opposition shares the views about the abolition of our property tax with the extreme right wing of the Conservative Party and members of Reform. It would not have been the first time Nigel Farage and leaders of Sinn Féin would have shared a platform on particular issues.

We need far more effective communication on how the local property tax is spent. South Dublin County Council has been particularly good on communication, almost breaking down to householders and constituents how it is spent. Similarly, in the case of Wexford County Council there have been efforts to show specifically the projects that have been funded out of that 15% increase. In that regard, I welcome the fact that the legislation now allows for variance of up to 25%. It is critical that this power remains with the elected members and that, ultimately, the elected members will always be able to have control. I would love to see a situation where we would go much further and allow elected members to have a far greater say over income generation and expenditure in our local authority budgets. I hope that will feature in the review the Government has instigated, led by the Minister, Deputy James Browne.

This is a very important Bill and there are a number of innovative aspects to it. This is only a small part of the overall question, however. The Minister might indicate in his response if he has any current plans to look at the current system of commercial rates as a method of funding local government, and to address the inequity that continues to exist there. We cannot continue to have a 200-year-old system which is basically how commercial rates continue to operate in the digital age.

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