Friday, 16 July 2021
Finance (Local Property Tax) (Amendment) Bill 2021: Second Stage
I join colleagues in thanking the Leas-Chathaoirleach for his work in recent months.
We need a wider array of wealth taxes in Ireland. That need has been driven home in the past year as we saw the very wealthiest become much wealthier during the pandemic. We have seen an increase in the wealth of many of the people on the rich lists at the same time as a large part of the population has been experiencing incredible financial stress. I am in favour of wealth taxes. We need to look to the wide array of assets, including stocks and shares, when seeking to mark people's contributions. I also support the local property tax. Its introduction was very poorly done and it is still a work in progress, but it is important to acknowledge that those who own a property, albeit with debt attached, are in a different situation compared with the vulnerability of those who have only income and nothing to sell or even walk away from. They include some of the most vulnerable families in Ireland. Lone-parent families, in particular, have the highest rates of poverty and deprivation and half the level of home ownership of other kinds of households in this State.
It is appropriate, therefore, that we have a property tax. I have a number of concerns, however, in regard to how it is being applied. Although I will address some of those concerns through amendments, the nature of a Finance Bill is that most of the proposals I might have put forward would potentially involve a cost to somebody. It might not be a cost to the State - in fact, some of the proposals might even have had a benefit to the State - but there certainly would be a cost to somebody and the amendments would, therefore, be ruled out of order. As a result, I am availing of the Second Stage debate to highlight some of my concerns.
It sends a poor signal when we have the Tánaiste talking in the past couple of months about how the people in Donnybrook whose houses have gone up by €100,000 and those in Ranelagh whose homes have increased in value from €535,000 to €647,000 are going to see a reduction in their property tax. It is a concern that this kind of message is coming from the Government. It seems to be the case that someone whose property value has gone up to €1.6 million will be paying a little less under the new bands. That may be reassuring for a very particular audience at a very particular time but it sends a really poor message in terms of progressive taxation, which is still supposed to be the policy of the State. Those messages were unfortunate and short-sighted if we want people to understand the importance of the LPT.
Any revisions of the tax should be progressive and should reflect the principles of progressivity. Will the Minister of State give us more information on the 11% of homeowners whose tax liabilities will go down? He referred to the mid-point rate. I do not know the extent of the revision but I know the bands are changing. In fact, three things are being changed, that is, the mid-point rate, the bands and the rates.What we want, therefore, are examples of how are we really protecting the progressive nature of this. Who are the 11% who are gaining out of this and how many of them are stacked towards the top of the scale? I am also concerned that the scale kind of peters out at €1 million or €2 million. What about properties worth €3 million or €4 million?
I have another concern, and some amendments to ask the Minister of State to look at it. There is a big difference between those who own a property, which may be their home or their family home, or even those who own two properties because we have a mechanism in the form a second home tax, and those who own 1,000 properties or 500 or 100 or 60 or 50. If we want to use property tax as a meaningful tool and if we also want to address some of the concerns the Minister of State will be hearing from the public, I suggest that we perhaps look at a different higher rate for those who own many properties. I will not read all the tiers I have set out as we will come to them in the amendments but consider those who own 100 houses or 100 dwellings or two apartment buildings or those who own 1,000 rental properties. Property tax may need to be changed and shifted on that. That might be something the Government is considering or something that can done through the current system, but it is something that would be useful. It would be really useful to have nuance and maybe more flexibility for local authorities, not simply to turn on or off the property tax or the amount involved but to be able to address these different situations. We talk about recognising specific circumstances and exemptions at the bottom, and there will be concern that some of the exemptions at the bottom are going to be phased out. Much as we recognise particular circumstances at the bottom with respect to vulnerabilities, we should similarly be recognising particular circumstances at the top with respect to people who have a particular ability to pay and a different capacity to pay.
When we engaged on this issue with the Minister for Finance, Deputy Donohoe, at the finance committee I asked him about the vacant property tax. Surely this is a tool we could use to address situations where there might be vacant properties. We were told there are very different situations where people might have vacant properties. This could be as a result of a bereavement but there may also be somebody who has 1,000 or 500 or 50 such properties. There are, as we know, apartment buildings in which half the units are left empty so we need to be moving on a vacant property tax and recognising that. When the Minister was before the finance committee, he told us that this is the gathering of information phase, that the vacant property tax will be coming later and that he would look at that based on the information. However, I am concerned that this Bill, as drafted, will tie the hands of the Minister for Finance and the Minister for Housing, Local Government and Heritage in respect of how that information will be used.
In section 31, which introduces a new section 39A, we have the information-gathering mechanism, which will include the asking of question as to is a property being used, is it empty and why is it empty. Then there is a clause which says that this information will not be used for anything other than the compiling of statistical information in respect of residential properties which are not in use. Thus, almost in advance, the Government is ruling out purposes it should be ruling in. The Government should be stating that it wants the information in question, that it is not attaching a tax to it at the moment but that it may do so in the future. Instead, the Government is stating that it can only be used for statistical purposes and that the data will not be available to Revenue if we decide next year to bring in a vacant property tax. It would be a very small change. I have amendments relating to it and I ask the Minister of State to consider accepting the principle, just to make it clear. We should not end up with a situation whereby if the Government does decide to bring in a vacant property tax we get another year's delay because the Department must do a full survey of everybody again in order to have the same information again for the purposes of a vacant property tax, when the exercise has already been done. That process being done twice would not be good value for money for the State.
On the question of fiscal equalisation, it is really important that this is not seen as the main source of revenue for local government because the position in the various areas across the country is very different. I am concerned in that regard. There should be progressivity in our funding and a move towards equality in how we fund our communities and regions in order that we ensure we do not simply reward those who are already wealthier.