Gerry Horkan (Fianna Fail) | Oireachtas source

I move:

That Seanad Éireann:recognises that:

- the Local Property Tax (LPT) was introduced in 2013 and current valuations are from that year;

- the primary purpose of LPT is to provide funding for local services;

- Fine Gael wrongly diverted 30 per cent of the revenue in 2014 to Irish Water;

- initially the revaluation date was set for November 2016, this was changed to November 2019, prior to the last General Election;

- Fianna Fáil consistently called for the postponement of the November 2016 revaluation so that significant reform could take place and people would not face large and unaffordable increases in their LPT bill;

- Fianna Fáil has consistently stated that LPT bills should not be increased as a result of the 2019 revaluation and that ability to pay and affordable issues need to be tackled;

- with the very significant increase in property prices since 2013, if left unreformed, people will face major increases in their LPT bill in 2020;

- LPT brought in €477 million in 2017 and this provides vital funding for local services;

- the revenue from LPT should remain broadly stable as a result of 2019 revaluations as home owners will not be able to afford to pay if a significant increase arises;

and calls on the Government to:

- undertake significant reform of the LPT system before revaluations take place in November 2019;

- ensure that households do not receive substantial increases in their LPT bill in 2020;

- ensure that households do not receive substantial increases in LPT bills in 2020 that would arise in the absence of significant reforms to the LPT system;

- examine the possibility of extending some relief from the LPT for those in multi-unit developments paying significant management charges; and

- introduce measures that would deal with ability to pay and affordability issues.

I thank Members for the opportunity to address this important issue. I welcome the Minister to the House. She and I dealt with another issue in the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach yesterday.

The local property tax, LPT, is a very important issue. The motion proposes that Seanad Éireann recognise that the tax was introduced in 2013, that current valuations are from that year and that the primary purpose of the LPT should be to provide funding for local services. It notes that in 2014, the previous Government wrongly diverted 30% of revenue from the tax to Irish Water. Initially, the revaluation date was set for November 2016 but the date was changed to November 2019 prior to the general election. The Fianna Fáil Party consistently called for the postponement of the November 2016 revaluation in order that significant reform of the tax could be implemented and people would not face large and unaffordable increases in their local property tax bills. My party has consistently stated that LPT bills should not be increased as a result of the 2019 revaluation and that ability to pay and affordable issues need to be tackled.

Given the significant increase in property prices since 2013, people will face major increases in their local property tax bill in 2020 if the tax is left unreformed. The LPT generated €477 million in revenue in 2017 and the motion acknowledges that this income provides funding for local services. It calls for the revenue from the LPT to remain broadly stable as a result of 2019 revaluations, whether through a reduction in the multiplier or by another means.

The motion calls on the Government to undertake significant reform of the local property tax system before revaluations take place in November 2019 to ensure households do not receive substantial increases in their LPT bill in 2020 that would arise in the absence of significant reforms to the LPT system. It also calls for an examination of the possibility of extending some relief from the tax to householders in multi-unit developments who pay significant management charges that are separate from the local property tax bills and cover services that most other people receive by virtue of paying the local property tax. I note Fine Gael has tabled an amendment that basically deletes our entire motion and replaces it with some kind of self-congratulatory motion about the wonders of LPT. I have no doubt Senator Paddy Burke or somebody else will have to try to defend that as best he can. We are debating the local property tax. The household charge was originally called "funding local services". However, half the time it is funding local services somewhere else. In many cases the money is not staying in the local authorities. Dún Laoghaire-Rathdown County Council, of which I used to be a member, generates more property tax than the whole of Connacht. I accept that property values are different but it is a local authority area that is five miles wide and eight miles long and generates a huge amount of property tax.

I will go through some of the statistics. Just because the value of the house is larger, it does not make people automatically better off. It often means they have a far greater mortgage against that house and equally that their monthly disposable income is quite different. Based on the revenue returns based on the property values in 2013, which is the last time valuations were declared other than for new houses that have been bought since then, 60.6% of houses in Leitrim are valued at less than €100,000. In Dún Laoghaire-Rathdown County Council, that figure is 1.3%. In almost every local authority bar four, less than 10% of the houses are valued at over €300,000, but in South Dublin County Council it is 19.3%; in Wicklow it is 15.1%; in Dublin city it is 19.7%; and in Dún Laoghaire-Rathdown it is 59.1%.

That does not mean everybody in Dún Laoghaire-Rathdown is very wealthy; it just means the price of property is much higher and people have much greater mortgages. It is not fair that they are paying huge amounts of money into a fund. In some cases the amount that is going to the equalisation fund, the 20% of that money, is greater than other local authorities are generating in their entirety.

We need to look at something other than just pure property valuation. We need to look at the services provided. I fully acknowledge that services in Dublin, such as public transport, lighting and libraries, are often better than in other parts of the country. Equally we must acknowledge that the people living there have paid enormous amounts of money for their houses and often have paid huge amounts of stamp duty at the time when the stamp duty rates went up to 9% and so on. They have paid a huge amount of money to live where they are living. At a recent meeting of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, I pointed out that a teacher down the country and a teacher in Dublin are paid the same amount, but the disposable income of one is very different from the disposable income of the other.

We should look at other measures than just pure valuation. Local services form part of it. One could use floor area, the number of rooms and so on. I am not advocating a bedroom tax or one of those kinds of things, but there must be more nuanced ways than just pure value. Value is easy, but many people have paid huge amounts of money for those houses and have huge mortgages. They need the process to be fairer to them.

It is not fair, for example, in Dún Laoghaire-Rathdown for a €1,000 charge, even after the 15% cut which brings it back to €850, that €200 of that €850 goes to the equalisation fund and €600 of that €850 replaces grants that were given by the Department in the old days for roads, housing and other things. The local authority, having collected a net €850, down from the original €1,000, is only €50 better off. A householder has paid €850, down from €1,000, and gets €50 extra into their local authority.

If I were in government and the Minister of State were in opposition, he would be giving out about that system, certainly if he represented a constituency where so many houses are valued in the top band of over €300,000. That is all the information we have. We do not have any further figures. I believe there are 20 bands, but Revenue will only give us figures for the bands up to €100,000; from €100,000 to €150,000 as far as €300,000; and then the figures for over €300,000. I accept that in almost all those local authorities over €300,000 is small. However, there must be a better way to do it.

I do not advocate higher property tax for the rest of the country. However, we must acknowledge that significant parts of Dublin are generating a lot of property tax and are not necessarily getting the services commensurate with that. Every local authority, bar the four Dublin local authorities, gets road funds in addition to their property tax from the Department. The property tax is supposed to fund the roads tax in Dublin, so there is no allocation for roads either.

The funding of local services is important. Funds were diverted from the property tax to Irish Water when clearly the local authority no longer directly provide that service, albeit there are service level agreements involving them. We need to look at LPT. The new valuation date is coming soon. We are highlighting it today as an issue. The most important thing is that householders do not experience a doubling or more of their property tax. I am sure the Minister of State also does not want to see that. Of course Ministers for Finance always want to raise more revenue, but that has to be found from somewhere.

I do not believe we should have a system based purely on value, not taking into account the mortgage and other figures, and not looking at services being provided. It will always be more efficient to run a largely urban local authority because of the number of people using a road, footpath, library or whatever. Of course, we want to ensure that every local authority is resourced properly. However, we should not ask householders in one local authority to transfer a big amount of money into a pot that is then used by other local authorities. That is what central government is for. The local property tax is supposed to be just that - a local property tax used locally. The amount of money some local authorities are putting into the equalisation fund is greater than the entire amount of property tax generated in many local authorities. That is not a fair system.

Our motion is reasonable. We are not asking the Government to abolish the local property tax; we are not asking it to halve it or freeze it. We are asking the Government to carry out a review to examine what we are doing and ensure people do not face massive increases in their property tax at the time of next year's revaluation. I think that is reasonable and measured. Fianna Fáil is working with the Government by facilitating its existence. We want a fairer property tax that does not penalise people who happen to live in Dublin. In many cases they are here because of employment prospects and so on. Their property prices are high because those properties are in demand, but that does not automatically make those people very rich. It is important for us to examine that figure and ensure the property tax is there for services to be funded properly.