Seanad debates

Friday, 16 July 2021

Finance (Local Property Tax) (Amendment) Bill 2021: Second Stage

 

9:30 am

Photo of Paul GavanPaul Gavan (Sinn Fein)

As I may not see the Leas-Chathaoirleach later, I would like to wish him well and thank him for all his work this year. It is nice to see the Minister of State, Deputy Fleming, in the Chamber. He is very welcome, as always.

Sinn Féin is opposed to the local property tax and our reasons are clear. The tax, as designed, is not only a tax on assets but a tax on debts, such that many people who are liable for it may have debts worth as much as 90% of the value of the property against which they are being charged. This concern should not be readily dismissed as it is a real and immediate concern for many citizens. We need to consider the burden the tax places on households. On 6 July, the Joint Committee on Housing, Local Government and Heritage was told by witnesses from Revenue that, on average, 43,000 people defer payment of the LPT every year due to inability to pay. In 2019, 50,000 homeowners deferred payment, more than 48,000 of them because they were below the income threshold. Sinn Féin unapologetically flags its concern for the workers and families who see an interest bill accumulating for tax on their home, many of whom are saddled with mortgage debt or may even find themselves in arrears or negative equity. We believe the LPT is badly designed and unfit for purpose. Instead of a property tax on people's homes and, thereby, their debts, we favour the introduction of a wealth tax levied against assets. The issue we have with the LPT is that it does not take account of someone's ability to pay.

It is clear that this legislation is ill-conceived and ill-prepared. It contains serious flaws. The LPT is and has always been intimately connected with local authority funding. Local government relies on central government transfers and own-source revenues, such as commercial rates. Given the regional inequality that exists, which was deepened by the financial crash and barely recovering before the onset of the coronavirus pandemic, fiscal equalisation has been crucial for the delivery of local services. Fiscal equalisation is essential to protect financially weaker local authorities and their communities, and to correct the effects of regional inequality and the unequal distribution of sources of finance. Before the introduction of the LPT, equalisation was achieved through general purpose grants, which were determined on the basis of historic baseline supports. The Congress of Local and Regional Authorities of the Council of Europe, in a 2013 report on local democracy in Ireland, stated: "[The] system of distribution of grants to local governments from the Local Government Fund is not transparent and the rules have been set without consultation with local authorities". Little has changed with the introduction of the LPT. In this regard, I agree with Dr. Gerard Turley and Dr. Stephen McNena of NUI, Galway, that the current regime is not fit for purpose.

This legislation will coincide with local authorities retaining 100% of LPT receipts, thereby ending the redistribution of 20% of the tax revenue through the equalisation fund. This is an opportunity to redesign the equalisation model to ensure it is fit for purpose. In 2021, 20 local authorities received equalisation payments totalling €133 million. It is essential that the current equalisation fund and how it is distributed does not simply remain the same, with funding coming from the central Exchequer rather than LPT contributions.

The Minister of State has brought forward a Bill that contains serious flaws. The changes brought about by this legislation will result in 36% of homeowners seeing their bills increase, while workers and families who are unable to pay will continue to see their interest bill rise on payments they must defer as a matter of necessity. As I said, Sinn Féin is opposed to the LPT. It is a tax that is badly designed and has failed to deliver quality local services for local communities.

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