Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank the Senator for putting forward these amendments. I am advised that the local property tax is forecast to collect €440 million in 2015. These receipts would be lost if local property tax was abolished and would need to be found elsewhere. This would represent a substantial loss to the Exchequer, particularly as under the terms of the Stability and Growth Pact, Ireland may not introduce discretionary revenue reductions unless they are matched by other revenue increases or expenditure. I look forward to hearing Sinn Féin outline what those expenditure reductions or revenue increases would be. This means that the Government must carefully consider any tax changes, as any reductions will have to be offset elsewhere.

I am further advised that there would also be significant administrative issues and costs associated with such a measure for Revenue. Senators will be aware that the introduction of a value based property tax was part of our obligation under a bailout programme at the time. Regardless of that, it is a stable source of income. It should be noted that the arguments in favour of a property tax go well beyond any obligations under an EU-IMF programme. It is part of a broader approach to taxation. The aim is to replace some of the revenue from transaction based taxes, including stamp duty on property, which had proven to be an unstable source of revenue, with an annual recurring property tax which international experience has shown to be a stable source of funding. The taxation of property through recurring annual tax is less economically distortional than the imposition of tax on either income or capital. This is supported by economic literature and OECD analysis. The recent OECD economics department working paper No. 1270 shows that property taxes are less harmful than other types of taxation, particularly for Ireland. Therefore, the Government does not intend to repeat the mistakes of the past and I am not in a position to accept the amendments.