Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The title is correct. First, it is a tax. Second, it is a tax on property. The receipts from the tax will be spent locally and therefore local property tax is the name for it. As Senators have pointed out, it applies to property portfolios as well which are held for investment purposes and rented. If somebody has 30 apartments and rents them, the liability for tax is not on the occupier but on the owner. It stretches well beyond the family home situation.

Neither members of Sinn Féin nor members of Fianna Fáil are in a strong position in arguing the case here because the average property tax in Northern Ireland, where Sinn Féin is a partner in government, is just over ¤900 and there appears to be no objection to that. It seems to me that Sinn Féin has a partitionist attitude to this particular tax.

Fianna Fáil's position is that it negotiated the provisions of the property tax with the troika when it was in Government. When it presented its alternative budget it proposed that the flat rate household charge be maintained.

In terms of principle, Fianna Fáil is in favour of a property tax and I do not believe there should be flat-rate property taxes. It was done for one year to introduce the concept. By and large taxes on property should be related to the value of the property because in general terms that corresponds to ability to pay, when the deferrals are taken into account.

We do not agree with the proposition for a wealth tax. Sinn Féin has it in its alternative budget but the yield it claims would run from it is totally exaggerated. Sinn Féin did not take the opportunity to have these items costed by the Department of Finance. There was an offer to the Opposition of costing by the Department of Finance, but Sinn Féin did not take it up.

Much of the yield from the wealth tax in France derives from the family home. The cut-off point is ¤500,000 for all assets, including savings, pensions and property - everything goes in. As in most parts of Paris a two-bedroom apartment might cost ¤800,000, ¤900,000 or ¤1 million, it is clear that family homes and family apartments go straight into the wealth-tax net. The French wealth tax is largely a family home tax. People are quite used to the concept of this kind of tax, which exists throughout Europe. Ireland is the outlier, the exception. Many reasonably well-off people in Ireland have properties in Spain, Portugal or the south of France and do not seem to have any problem paying the local property tax on those. The same principles apply here.

We cannot keep taxing income because a tax on income is a tax on work. The higher we put the price of something the less we get. We must stop taxing work and broaden the tax base. People's incomes may not be immediately identifiable, but if they have a very large mansion it is very identifiable and it is possible to broaden the tax base that way, which is worth doing. I do not believe this will be a serious imposition on anybody because the thinking behind the tax is that everybody will pay something with very few exclusions. With a base of 1.9 million units it is possible to have quite a low average on this. We are tying in both the valuations and the rates for three years. There will be no revaluation until November.

We are strengthening the local element of the tax by giving discretion to the local authorities to vary the tax by plus or minus 15%. In practice, candidates in the local elections in 2014 will propose to their electorates either that they will leave the tax the same or that they will increase or reduce it. When they vote for the next set of councillors, the public will have a direct say on whether they want property tax to increase or decrease. If this becomes a stable element of the tax code, future governments may decide to entrust the entire scheme to local authorities, which would be normal enough. In the first instance and as long as we are in government, this will be a tax to be collected by the Revenue Commissioners and put into the Local Government Fund to be spent locally on local services. There will be a direct relationship between the level of tax collected in an area and the amount of money spent on the services in that area.