Aideen Hayden (Labour) | Oireachtas source

I welcome the Minister of State. Senator Mark Daly has stated this is the wrong time to introduce the local property tax. I suppose it would have been better to introduce it when tax revenues were buoyant and income tax could have been replaced with a property tax. In other words, we could have redistributed the burden of taxation rather than introducing an additional burden. As the saying goes, however, we are where we are. The previous Fianna Fáil Government did not take the opportunity in this regard when it presented itself and people must remember this.

I do not wish to get into a debate on the issues relating to the principal legislation, particularly as they were discussed in 2012. The property tax will broaden the tax base and is necessary. More importantly - this is an issue with which we have not really engaged - it will promote local accountability and improve local democracy.

Some of the changes contained in the Bill are minor in nature, whereas others are less so. I am happy that the Minister for Finance saw fit to listen to what had been said in the debates on the principal legislation in this and the Lower House and has brought forward amendments. I hope other changes will be brought forward and that these will reflect the experience gained in introducing this new tax. The previous tax was not a property tax, per se; rather, it was a form of rates. Such rates were deeply unpopular because they were regarded as being extremely unfair and I would not like us to repeat the mistake made in this regard. This is a new local tax which, it is hoped, has been designed to improve local democratic participation and will be re-evaluated in that context.

I welcome the changes which place the properties owned by local authorities and voluntary housing associations in the lowest valuation band. I accept that these valuations will only last until 2016, but it is an important recognition of the role of social housing. They provide for a very important distinction between social housing and the remainder of the housing stock. Many Senators come from local authority backgrounds and are aware that local authorities provide housing for those who cannot reasonably provide it from their own resources. While tenants whose circumstances change have the opportunity to avail of tenant purchase options, the reality is that they pay, according to their means, through the differential rent system. In theory, therefore, they are paying according to their means. This is the difficulty when one introduces a tax which takes no account of individual circumstances. In valuing social housing, there is a need to take into account the fact - this has been proved to be the case - that tenants in such housing generally are of very low means and do not have many resources at their disposal. Many local authorities will not be in a position to place an additional charge on tenants.

Valuing social housing is difficult.

Tenants have security of tenure and maintenance costs are high. There are successive tenancy rights, inheritance rights and so forth. There is very good reason to believe that one cannot value social housing as one would value other housing on the open market. It is very difficult to give an open market valuation. I would argue that some social housing has no value at all, when one takes into account the costs that attach to local authorities. I also welcome the exemptions given to properties used by charities for recreational purposes as this is an important recognition of social function.

I wish to give particular welcome to the exemption from the tax for houses damaged by pyrite. However, I am concerned that it should be made as easy as possible for people living in these damaged properties to claim that exemption. I suspect some of the houses damaged by pyrite could not be given away. This does not take into account the trauma suffered by people living in these homes. I am concerned that the legislation provides for the furnishing of a relevant certificate which will be provided for in regulation by the Minister. I urge the Minister, when making this regulation, to bear in mind the difficulty already suffered by residents and that the cost of obtaining such a certificate should not be such as to make it more costly than the relief itself. In my view, the relief should go beyond three years.

I refer to the other new categories of deferrals. It is important to bear in mind that these are deferrals, not forgiveness. According to Stubbs Gazette, it is estimated that 25,000 households will avail of the personal insolvency legislation. There are many reasons to believe that this number could be higher. I also recognise the attempt to try to deal with people who have suffered particular financial hardship as a result of the economic circumstances and that it will be open to the Revenue Commissioners to decide whether such people are given deferrals. I agree with Senator D'Arcy with regard to people who bought at the height of the Celtic tiger period. Stamp duty was a form of property tax and it must be recognised as such.

One of the difficulties with this legislation is that it does not know whether it is fish or fowl. It does not know whether it is a property tax or a local government tax. It needs to be clarified how much of the "local" property tax will be spent locally. If this tax is to be accepted by the ordinary man in the street, there needs to be absolute clarity as to where this tax is spent. I know that members of local authorities, in particular, members of the larger local authorities, are concerned. Their concern is that the local property tax will be used as an excuse to remove central government funding in a very significant number of areas. That concern needs to be addressed. If this tax is to gain acceptance there needs to be very sincere transparency and openness and very real clarity. I would not favour more than 15% of local property tax being transferred outside of a local government area. I accept there needs to be some transfer to those local authorities who will have a difficulty in raising taxation.

I wish to refer to a number of specific issues. Areas of land in excess of one acre are exempted from valuation. I understand that mirrors the Succession Act and other pieces of legislation. However, in my opinion, adjoining land that is not used for business purposes such as farming, is contributing to the residential amenity and should be taxed as such. This is not a frivolous point. There are properties all over the country that have from two acres and up to ten acres of land adjoining them. Properties on the hill of Howth and on Killiney hill have lands in excess of one acre. These should be valued for residential amenity. It is unfair to people, who literally have a handkerchief space in their back garden, that this is not the case.

I made the point about stamp duty. Another important point relates to service charges for apartments. At the moment, these charges range between ¤1,500 and ¤2,000. This charge is to allow for privately provided services within apartment blocks which are not being provided by the local authorities. Some recognition of that fact needs to be made. I do not know nor can I propose how that would be done but it should be done. It is certainly an incredible burden on people who live in multi-unit dwellings and it needs to be taken into consideration.