Kevin Humphreys (Labour) | Oireachtas source

Perhaps I should apologise to Fianna Fáil Members for reminding them of all their mistakes. That is fair enough.

The Minister of State will forgive me for mentioning Dublin as an example which has suffered so badly from the abolition of domestic rates. Probably the first great example of populism in this country was the buying of votes to the detriment of its citizens. Hundreds of millions of euro have been lost or stolen from Dublin since the abolition of rates in 1977. A structure was supposed to have been put in to compensate Dublin for the loss of domestic rates but that never happened. I believe an independent study found that about €300 million in investment in the Dublin region was lost because of that change. Dublin was never compensated for that. Currently it works out at about €38 million a year when what would have been raised in domestic rates is compared with local government grants, etc. Those are rough figures.

I want to be positive and suggest solutions. I believe there is a menu of solutions and what suits Dublin might not suit Kerry, Carlow or other places. About 6 million tourists come to Dublin city. The norm when staying in a hotel abroad is to pay a tourist bed tax. I do not suggest such a tax in Donegal or Kerry would be sustainable. However, a bed tax in Dublin would be sustainable and would also be a financial encouragement for tourists to move outside the city and visit the rest of the country. That needs to be offered as part of a menu.

Too much of local government funding is ring-fenced. When local authorities are given their funding where that money must be spent is already preordained. We need to give greater powers to local councillors to make those decisions. As they are closest to the coalface, they should have the responsibility for deciding how that money is spent.

Senator Hackett earlier spoke about footpaths, etc. Such infrastructure should be provided by the developer with the development levy coming through. When housing estates are being developed at the edge of a small town there should be a requirement to put in a footpath and street lighting connecting the new estate to the town centre prior to families moving in.

The revaluation for the purposes of calculating the local property tax will be problematic. Senator McDowell frequently cites the comparison of someone living in a two-up two-down in Dublin with someone living in a mansion in Carlow or Kilkenny and the differential in the property tax they pay. When the revaluation comes through, someone outside Dublin living in a five-bedroom house on one acre of land might end up paying €500. Someone in Dublin living in a two-bedroom terraced house with no front or back garden could end up paying €700. There is no equity in that and there needs to be some recognition for the size. It depends on whether we are talking about a property tax or a wealth tax. I have no problem with either, but we need to define what we are taxing. Are we taxing for the provision of services or are we taxing the accumulation of wealth through property? We need to define exactly what we are taxing. The only tax some of the wealthiest people, whose homes are in the constituency I formerly represented, are paying in this State is the property tax because they are tax exiles. They have very salubrious homes in Dublin 4 and that is the only tax they pay. We need to define what we want to get. Property tax in urban areas should be for the service that is provided.

I was heckled extensively by Fianna Fáil at the start of my contribution. I ask the Acting Chairman to give me a little bit of flexibility towards the end. In other jurisdictions a capital city is sometimes funded as a federal city. Certain infrastructure in a capital city is funded by central taxation.Washington DC would be the prime example. The infrastructure is maintained by the federal state while the city raises money for its services. It has a range of government buildings.

The Irish Water issue was raised as Dublin City Council lost approximately €8 million in that case. We have argued about this but it was a loss of revenue for the city that had to be made up by the ratepayer. There were two votes in Dublin City Council. One was earlier in the month, at which the property tax rate was set. Fine Gael and Fianna Fáil voted to reduce the rate of property tax and then fought against the raising of the commercial rate. There is a cause in this and there is responsibility. People wanted to reduce the property tax rate and this caused the raise in rates.