Paschal Donohoe (Dublin Central, Fine Gael)

It was a slip of the tongue nonetheless, so I apologise. I know what it is like. I was referred to as Paschal Sheehy for all my early years in here and then I eventually turned into Paschal Mooney before becoming known as Paschal Donohoe. I apologise to Senator Byrne again.

The point he opened by making was on the trade-off between the need for affordability and the stability of income. That is the balance we have tried to get right. A small number of people will be moving band and we are asking them to pay €20 or €25 extra. I am conscious that for lots of people, finding extra money is difficult with the cost of living, with everything and with the challenges that many are facing. We have tried to get the balance right between what we are asking people to pay - to be as affordable as possible and well below the level at which the value of homes has been going up by in recent years - and in turn giving our local authorities the confidence they will know how much money they will have from the local property tax over a five-year period. Since I brought forward this legislation, I have heard lots of Members of the Oireachtas speak very positively about the contribution the local property tax has made. That is demonstrated by the reality that the majority of local authorities have put up local property tax rather than cut it. Dublin City Council, the one I know the best, is about to make the decision that for the coming year it will stop reducing it by 15%. This is all just a recognition by councillors that if you bring in additional revenue, local authorities are very well-positioned to know how to spend that money well and that is what we have tried to get right here in this legislation.

Senator Byrne also touched on the importance of the deferral scheme and acknowledged the changes we have made to it. He welcomed that we are going to allow the LPT to be put up by more. We are going to allow local authorities to increase it by up to 25%. While I do not believe many or even any local authorities will go all the way up to a 25% increase, I want to give the flexibility to authorities that if there is a really important project they want to deliver within a given year and they believe the importance of that project is acknowledged by the communities they represent, then flexibility is there to do that.

Senator Byrne asked me how new properties would be taxed and the issue of equality between properties that were more recently built and pre-existing ones. I have two points on that. The benefit to the two revaluations we have done, both of which I have been involved with, is, absent the revaluations, we were in a situation where any homes built since the local property tax was first introduced in 2013 were not paying the tax at all. There was a real issue of equality regarding a home built in 2011 for which local property tax was being paid and a home built in, say, 2017 or 2018 for which it was not.One of the benefits of being on our second revaluation is we ensure that, as homes are built each year, they are brought into the local property tax net. That will then ensure that all homeowners are making a contribution to local services. The second point in response to the important issue is how we can then ensure that homes that are built later on in the lifetime of a revaluation are taxed in the same way as homes that were already built or were built earlier in the life cycle of this revaluation, during the five year period. The way we do this is that we re-price or rebalance all homes back to what their valuation would have been at the start of the revaluation period. Revenue then provides guidance to allow new owners of new homes to do it. Of course, word of mouth and looking at information that is available on the web will allow homeowners to do that themselves in many cases. That is to ensure we are taxing homes in a fair way.

On the points made by Senator Crowe, he talked about affordability. I will emphasise a point the Senator noted. The majority of homes will stay inside their existing valuation band. To be completely clear with the House, and all the Senators who have spoken on the Bill here this afternoon know this, even if you are inside the same valuation band, your LPT bill will still go up after this legislation is passed. That is because the mid-point of the valuation band goes up, and because the mid-point goes up, that requires those to pay a higher LPT bill. The vast majority of people are staying within that band. By moving the rate, we have tried to ensure the new tax people will pay will be as affordable as possible. For those who are at the very start of the LPT bands, band 1 and band 2, it is €5 and €10. For those who move up, it will be around €20 to €23 extra we will ask them to pay. It goes up more for people who have higher value homes, but it is a reasonable assumption to make that the majority of those who are living in higher value homes will be a in a position to pay the higher local property tax bill.

They key thing is if you do this every five years, over many years we will build up an increasingly significant revenue stream for local authorities. There are many other jurisdictions that have introduced local property taxes and found it very difficult to revalue them at all, meaning the bill is calculated off the value of property at a distant point from previous years. The fact we are now completing our second piece of revaluation legislation will help with that. Senator Byrne made the point about how important this is to local authorities and the importance of consistently doing revaluations, which we are aiming to do here in this legislation. Those are all the ways in which we are trying to deal with the issues he raised.

While Senator Murphy and I differ on this, I understand the points he has made. I cannot help be struck by the lingering feeling, however, that if he was in my shoes, he would do the same thing with this Bill here this afternoon. I am sure he will refute that in the response back in a moment. He will know from his work as finance Minister that if you make a decision to get rid of a particular form of taxation, you rarely have easy answers as to how you replace it. However, I know his view and the view of his party in relation to this legislation, which I debated elsewhere. Senator Murphy made the point that we have alternative ways of raising the €600 million, but there are few easy ways of raising €600 million. When I look at the alternative ways of doing that, all of them create costs, difficulties and trade-offs that I believe we should not be doing as a country. Where this ultimately ends up is people who are against this tax saying we have a surplus of €8 billion and we should use the surplus to pay for getting rid of the local property tax. However, we are awash with warnings from people, including me and the Department of Finance, saying that surplus, while it is very good to have it at the moment, is ultimately made up of a very small number of taxpayers. None of us want to be in a situation where we see tax revenue from a small number of taxpayers collapse again with all of the consequences of that and what that would mean for the future of our economy and country.

One point the Senator made was about the concrete block exemption and the fact only 1,000 homes have availed of it, which is true. I shared that information with the Dáil last night, but that is because we have a consistent way of looking at what the damage threshold is to allow you to avail of the exemption of local property tax between this legislation and the legislation that oversees the defective concrete block remediation scheme. We need to ensure they are consistent with each other and we are aiming to recognise the difficulties that lots of homeowners face from the impact of mica and the huge difficulty the spread of mica has caused. In this legislation, we are now broadening the number of counties that will be able to access the exemption because, very regrettably, we now know the number of counties that are affected by this is greater than when we brought in the first revaluation a number of years ago.

I thank the three Senators who have contributed to this debate and others who might participate in Committee and Report Stages. I thank the Seanad for the facilitation of this piece of legislation.