Dáil debates

Thursday, 4 October 2012

Ceisteanna - Questions - Priority Questions

Property Taxation Application

4:40 pm

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance the advice he has received from the inter departmental tax strategy group on the property tax he intends to introduce in Budget 2013; if he will make the advice of this group public in advance of the Budget; if this group has raised any concerns regarding the property tax as was the case with the tax strategy groups concerns with the household charge in 2011; and if he has or if he will undertake an impact assessment of any property tax on household income and levels of financial stress being experienced by those liable for the tax. [42493/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Department of Finance participated in the interdepartmental group, reporting to the Minister for the Environment, Community and Local Government, the terms of reference of which were "to consider the design of a property tax to be approved by Government to replace the household charge and that is equitable and is informed by previous work and international experience". The report of that group is being considered in preparation for budget 2013. The Deputy referred to a tax strategy group in the context of the household charge in 2011. The tax strategy group is an interdepartmental committee chaired by the Department of Finance, with membership comprising senior officials and advisors from the Departments of Finance, An Taoiseach, Health, Environment, Community and Local Government, Jobs, Enterprise and Innovation, Social Protection and the Revenue Commissioners. Papers on a wide range of tax related issues are prepared for consideration by the tax strategy group in the period prior to the budget each year.

I presume that the concerns to which the Deputy refers are comments within one of the recently published papers which were presented to the tax strategy group in 2011 on taxation of property. That paper outlined advantages and disadvantages of the household charge, which is appropriate in a forum where various policy options are being discussed at official level. The paper also outlined the advantages and disadvantages of various other possible property taxation options. The paper pointed out that a flat rate charge, such as the household charge, delivered a tax on property, which was an element of structural reform suggested by the troika, and that it had the most potential of any short-term property tax option to be implemented quickly.

There has been no decision on the final version of the tax but my officials will analyse its impact on household incomes, as is customary when budget changes are being considered.

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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It was interesting to listen to the Minister's engagement earlier with Deputy Michael McGrath. The Minister knows very well that Sinn Féin presents its pre-budget submissions every year and they go by the wayside as he does not take the points in them on board. There are many points and the Minister may not agree with all of them but he could, for example, standardise discretionary tax reliefs. I do not know what the Minister is planning to introduce in respect of property tax but I am sure standardising discretionary tax reliefs would bring in more than the figure of €500 million brought in through the property tax mentioned by the Taoiseach. That is one alternative among many others. Hopefully, if the Minister is sincere, he will look at alternatives because this property tax will weigh very heavily on people, particularly those on low and middle incomes, and on the economy.

I know the Minister for the Environment, Community and Local Government commissioned the report. It was believed that it would be under his remit before he made a mess of the previous tax. Will the Minister publish the advice of the expert group before he introduces this tax? The President of the European Parliament spoke here earlier and we talked about the importance of the role of national parliaments and the European Parliament. If the Minister wants a real engagement on budgetary policies, he should publish the advice he has been getting from the Department. He should not allow it to come out a year after the Minister for the Environment, Community and Local Government introduced the household tax and we then see that advice was given to the Department that there would be major issues in terms of collection and enforceability. He should publish the advice so that we can have a proper, robust debate because nobody in this Chamber wants to put forward proposals that do not stack up and cannot be robustly defended. The Minister has the benefit of having that advice so will he publish the expert group's proposals and views in respect of the property tax, and any analysis that will have been done within the Department on the impact on the domestic economy and low and middle-income earners?

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The group that was chaired by Dr. Thornhill was constituted by the Department of the Environment, Community and Local Government and the report of that group was sent to the Department so in strict terms that Department has ownership of that report. I assume the Department will publish it in due course but I do not know its timeline for publication. I stated what the Government has decided earlier on. A property tax will be introduced in the budget.

It will probably be effective from 1 July 2013 but that date is to be confirmed. The Revenue Commissioners will collect the tax. We will not be collecting €1 billion, as the IMF advised. Otherwise, the detail has to be worked out. Some of the detail will pertain to the recommendations contained in the Thornhill report and some will not. As with all such matters, taxes are announced on budget day. One does not usually have rehearsals of tax announcements: taxes are announced on budget day and one can debate them subsequently during the passage of the Bill that implements them.

I understand there are talks taking place among the Whips to have a debate on the economy the week after next. The Deputy will have a full opportunity to state his position on the economy and the fiscal measures he believes would be of most benefit thereto.

4:50 pm

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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I appreciate the Minister's comments. While I completely understand that it is he, as Minister for Finance, who will announce the tax, if it is introduced, on budget day, I believe the key question pertains to the need to furnish us with information on property tax. While the information in the report may be ignored by the Department of Finance, it is important that it be circulated to Opposition Deputies so they, too, will have the benefit of expert advice on the matter. The idea that the report is that of the Minister for the Environment, Community and Local Government, Deputy Phil Hogan, is inaccurate because the Minister for Finance will introduce the legislation; it is now under the remit of the latter. Therefore, I cannot believe the report is not now on his desk and with his Department.

My second question was not only on the Thornhill report but also on the impact of the tax on low- and middle-income earners. The Minister is well aware that Allied Irish Banks raised its variable interest rate by 0.5 percentage points yesterday. It also did so at the end of July. Given an average mortgage of €200,000, some 70,000 people have seen their mortgage interest payments increase by €1,800. That is a lot of money. How is the Minister factoring in the impact of imposing a property tax on these people who are already being shafted by the likes of Allied Irish Banks, to which the taxpayer has given €21 billion in the past year to prop it up? Is any consideration being given to the impact on the domestic economy and low- and middle-income groups? Has the Minister commissioned any studies in this regard? Will he do so before the tax is introduced?

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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There is a wealth of analysis on the impact of property taxes on an economy as a whole. Normally, it is positive rather than negative. An increase in income tax, for example, would be far more negative. A property tax is applied on a fixed basis in that everybody who owns property pays unless he is subject to an exemption, for example. The data are available. The impact on individuals will be assessed in the preparation for the budget.