Michael Noonan (Limerick City, Fine Gael)
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The introduction of the local property tax will serve a dual function. First, it will provide a stable funding base for the local authority sector, incorporating appropriate elements of local authority responsibility. It will strongly reinforce local democratic decision-making and encourage greater efficiency by local authorities on behalf of their electorates. Second, it will deliver significant structural reform through broadening the base for taxation in a manner that does not directly impact on employment and thereby contribute significantly to meeting the immediate financial requirements of the EU-IMF programme.

Before I get to the detailed sections of the Bill, I wish to respond to some of the issues and concerns raised in the other House and elsewhere since publication of this legislation. There has been some criticism of the decision to give the Revenue Commissioners responsibility for the collection of the local property tax. I do not intend to apologise for giving the Revenue Commissioners responsibility for administering the local property tax. They have vast experience in the legislation, systems and collection and enforcement procedures necessary for the smooth running of the tax system. It has been claimed that the deferral system and the 4% simple interest rate will force people to sell their homes. This is a blatant exaggeration. The rate of tax is 0.18%. A deferral for 20 years would result in an outstanding charge of just 5.1% of the value of the property - 3.6% representing 20 years of deferred tax at 0.18% and 1.512% representing the accumulated interest. The level of progressivity and equity of the local property tax among those on the average industrial wage and those on ¤200,000 per year has been criticised. If such persons are liable for this tax, they will pay the same amounts if they have residential properties which are of the same value. In general, people on higher incomes will have higher value properties. A higher rate of this tax is being applied to properties valued over ¤1 million.

The local property tax has been referred to as being anti-Dublin. The market values of residential properties vary considerably throughout the country. The market value of a residential property is related to the characteristics of the building itself, the site on which it is located and the characteristics and amenities of the neighbourhood. There will be a relationship between the market value of a house and benefits to the owner in terms of enjoyment of the amenity value of the property. Owners of more valuable properties would pay more under a market value-based assessment scheme. Taxable values based on market valuations would generally be higher in urban than in rural areas. This is equitable to the extent that market value provides a measure of the value of a residential property to the owner, particularly in terms of its proximity to places of work and local amenities and facilities.

In relation to mortgage arrears, the Government is conscious of the difficulty some homeowners are experiencing in meeting their mortgage obligations. The main focus of attention is on those mortgage holders who are experiencing genuine difficulties in meeting their commitments in respect of their homes. A range of measures is being advanced in this area, including personal insolvency reform, the implementation of the mortgage to rent initiative, the engagement with mortgage lenders on the development and implementation by them of mortgage arrears resolution strategies and the provision of a mortgage advisory function. Each family in mortgage arrears faces unique difficulties. We must have a range of solutions which can be adapted to resolve each family's difficulties. A system of voluntary deferral arrangements focused on particular categories of householders will be implemented to address cases where there is an inability to pay the local property tax under specific conditions.

The lack of a relief against the local property tax for people who paid large amounts of stamp duty has been mentioned. The payment of a large amount of stamp duty at the height of the property boom was not recommended by the Thornhill group as a basis for relief, as it does not have regard to ability to pay. In making its recommendation the group was influenced by several considerations in regard to those who had paid large sums of stamp duty during the property boom, including the fact that the impact of such a relief on taxpayers would not be targeted on those in need. The system of deferrals provided for in the property tax is more closely targeted at ability to pay than any exemption for stamp duty paid would be.

The local property tax will apply to local authority houses. I note that domestic rates are charged on local authority properties in Northern Ireland and collected through the rental system. The Thornhill group considered whether local authorities should be liable as owners. Notwithstanding the economic arguments in favour of that approach, the group, on balance, did not favour creating a circular flow of payments. The Government's view is that issues of proportionality could arise if owners and local authority tenants were treated differently. While reform of differential rents would contribute to horizontal equity between local authority tenants and low income owners, anomalies could arise in cases where local authorities owned and rented out properties in otherwise privately owned housing estates. The tenants in such properties would not be subject to the local property tax, whereas the owners of other properties in the same estate would have to pay it.

Denis O'Donovan (Fianna Fail)
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I must put the question: "That section 5, and each of the sections undisposed of, are hereby agreed to in committee, the Title is hereby agreed to in committee, and the Bill is hereby reported to the House without amendment."

Diarmuid Wilson (Fianna Fail)
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Under Standing Order 62(3)(b) I request that the division be taken again other than by electronic means.

Paddy Burke (Fine Gael)
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When is it proposed to take Report Stage?

Maurice Cummins (Fine Gael)
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Tomorrow.

Paddy Burke (Fine Gael)
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Is that agreed?

David Norris (Independent)
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Let us hope the Seanad is treated a little better tomorrow. It would be very refreshing if the Minister observed the decencies of this House.