Finance Bill (Property Tax) (Amendment) Bill 2013

 

I would like to acknowledge the complex task of establishing a new tax base, one that is sustainable, and one that does not affect our competitiveness and job creation. This particular tax base, in its nature is open to various anomalies, interpretations and exemptions.  It requires a substantial amount of logistical and legal expertise that has evidently been applied to both this Bill and the tax as a whole, while at the same time ensuring it is fit for its purpose, which is to fund local services.        

 

This Bill has identified some of the key issues raised at debate stage which have now been written into this legislation, mainly in relation to exemptions for the most vulnerable, deferrals for low income households, and reductions in rates for local authorities, and I welcome this as an improvement to the original Bill introduced last year.  

 

I have campaigned since the introduction of the Household Charge, along with the late Shane McEntee, that homes that are affected by pyrite are without a question unfinished due to the remediation works that will inevitably have to take place, and therefore should be included in the ‘unfinished’ category of exemption.

 

I was looking forward to welcoming this Amendment Bill in respect of the property tax exemption for properties affected by pyrite. I accept that it is not possible to grant a blanket exemption for properties that do not have proven existence of this material.  On reading the legislation and taking in its detail, I along with many affected homeowners cannot but express my deep disappointment at the extent to which this exemption goes. The qualifying bar has been set too high.  

The exemption was a chink of light for people who have been through hell and back due to this destructive material in their homes, and as details continue to emerge that homes must have category 2 damage before seeing any NSAI certification that is required under this legislation to qualify for an exemption, it has been cruelly removed due to a lack of foresight on the part of the Department.

 

 

If we take the number of affected homes identified in the pyrite report as 12,500 and average each house to be in the €300k category, that is a total of 3.75 million that is due to be collected and that is massively overstated due the devaluation that pyrite has on a property but for the purposes of discussion, the worst case scenario is a loss of 3.75 million out of €250 million in 2013 and €500 million in 2014. It is a drop in the ocean and the Minister needs to rethink this fast.

 

What this Bill has done is disqualified homeowners who have paid for testing and have scientific proof that their property contains pyrite €“ proof which up to this date has been accepted in a court of law €“ on the basis that the extent of damage in their home is not significant enough.          What about people who have their homes tested and have visible signs, but are in a category 1 stage? How can we possibly tell them that their homes are not included? Or people who have actually covered up unsightly cracks?  Should they be punished for being house proud, wanting to cover cracks for the benefit of maintaining a respectable looking home?  

 

These are family homes, bought at boom prices, with large mortgages, abandoned by the entire industry that was responsible up until this point where we lobbied and lobbied until government stepped in. The property tax exemption was a chance for us to show recognition and support to these homeowners and I believe that this if the right thing is not done we will have not done right by this people.  We promised an exemption for affected homeowners and for me and the thousands of people affected the Bill in its current form is going back on its promise.

 

Now for the positives.

 

This Bill will ensure that homes that have been adapted for incapacitated persons will receive an exemption, and homes with a disabled person will receive a reduced rate. I commend the Minister for his sensitivity regard to the financial hardship experienced by citizens and their families who are affected by disability or incapacity.

 

I also welcome the exemption for properties own by various charitable organisations. In my view this is both a common sense approach, and recognition that our charity sector provides an extraordinary service with minimum cost to the exchequer. Properties purchased for charity use are made possible through donations or government funding, and are used by citizens when they are most in need.  Taxing this accommodation I believe is a counter-productive exercise and would result in a reduction of charitable services.

 

 

One of my major concerns that I raised at the previous debate on the primary Bill was the nature of how the local charge was applied to local authority houses.  This is a complex issue.  We don’t want to put local authority tenants over the edge with rental revenue likely to reduce as a result.

I believe however that it makes no sense for local authorities to be viable for a self-funding tax €“ however there is a requirement for the burden to be shared across all properties in order to reduce the cost for all other homeowners.    

 

I think that the decision to reduce the rate to the minimum charge for all local authority homes is actually a good resolution for now, for a number of reasons €¦.

 

Firstly, it reduces the burden for local authorities in Dublin and city centres, where the value of their properties would have meant higher rates versus their rural counterparts.  This would have resulted, once again, in money going from Dublin or urban areas to the local government fund. I am not talking about parish pump politics €“ I understand that residents in urban areas may benefit from the infrastructure that does not exist in many areas down the country. The fact remains however that local authorities such as Dublin City Council and Fingal County Council also have to provide services, build roads and local infrastructure where land is more expensive, rents are more expensive and the acquiring of social housing is more expensive.    

 

As someone who represents the largest Dublin Constituency I think it is fair that Fingal County Council will pay proportionally the same than their rural equivalents, particularly if it is going toward a central fund.

 

It is my firm belief that everyone should make a contribution of sorts toward the local economy, and the upkeep and maintenance of the local community of which they live and benefit from. I hope that this amendment will position local authorities to pursue this policy by increasing affordability and therefore the opportunity to make a contribution.

 

On a separate note I would like to openly welcome the measure that obligates honesty and transparency between the buyer, seller and the revenue commissioner at the sale of a property. We would be slated, and quite rightly, if we were to allow for a loophole for people to withhold monies due to the state. The Bill states categorically that any reasonable changes are fully acceptable, and no one who pays their taxes as due will need worry about this amendment.

 

I would just like to briefly mention the deferral scheme for homeowners where households with incomes if €15,000 or €25,000 can avail of an option to pay at a later date, or the half rate deferral option for family incomes of €35k. This measure is to allow breathing space for families at a time of a temporary reduction in income. This was not set up to be an exemption. It is an appropriate means of reducing a  burden at this particular point in time where individuals may not be able to find work, or may be restricted due to family commitments that reduces their income on a temporary basis. It is designed to deal with non-permanent or unusual circumstances that will change over time.

 

I would like to finish by acknowledging that while the legislation is only the first step in this process, there is a lot of work to be completed by revenue and Department in the coming weeks. The Department of the Environment in order to update the unfinished housing list in order to advise residents of exemptions. I know that many authorities were not entirely comfortable with the list of exempted estates when it came to the Household Charge as it was based on somewhat out of date surveys from 2010. At this stage processes are happening to ensure that this is a fairer and more relevant list of exempted areas. I would urge the relevant departments to ensure that this process is given due priority in order to communicate liability with households as soon as possible to allow for financial planning and clarity.  

 

What we are trying to do here is to follow a programme to repair of our national finances, while being conscious of vulnerable homeowners, of national crises such as the pyrite fiasco, while also continuing to run local services at a time when there is more financial pressure on every department and every branch of government in this country. This Bill is reflective of the difficult balancing act that is required by government and I commend the Minister for his work.