Finance (Local Property Tax) (Amendment) Bill 2013

I begin by reiterating my deep unhappiness with the method of calculation that is to be used to determine liability for the property tax. I do not think that will come as a surprise to anybody, not least the Minister. Like many of my colleagues in urban Ireland, I believe the proposed regime is unfair to Dubliners and, to a lesser extent, Cork dwellers and those who live in other cities. It is an unsustainable tax. It cannot survive the test of time in its current form. I regret that because I support the concept of a property tax. If we had introduced such a tax long ago, we would not have had the property boom – or at least we would not have had it to the same extent – and we would not be in the state we are in now. It is patently unjust that a person in rural Ireland could pay as little as one ninth of what a Dublin person with a similar income and a similar home will pay. While that would be an extreme case, it is certainly true that a person in a rural area will only ever have to pay a fraction of what a person in Dublin in similar circumstances, with the same size of home and the same income, will have to pay. The Minister is aware that an essential attribute of a tax is that it should be fair. This is just not fair.

The argument that better services are available in Dublin is absolutely true, but it is irrelevant because such services are paid for from general taxation. We are more than willing to pay for them. The taxes raised in Dublin pay for such services. Any surplus that exists is used to subvent services in rural Ireland, which is as it should be given that the whole purpose of general taxation is to distribute income. My essential point is that the distribution of income is not the purpose of a local tax. The argument that a house in Dublin is a more valuable asset is also true, but it is certainly not a justification for charging more tax. People in Dublin have a more valuable asset because they paid more for it. The important point is that they will continue to pay more for it over the course of their 30-year or 40-year mortgages. As a consequence, they will have less disposable income than their rural counterparts over that period of time. I should also mention that many of those who bought in the last 15 or 20 years made very substantial stamp duty payments. While I realise that the tax yield that is expected from this measure in 2013 is in the budget and cannot be changed, I want to lay down a marker by asking the Minister to consider amending the way it will work and will be calculated in 2014.

What I want to talk about are the specific measures in the Bill, which I largely welcome. In particular, I thank the Minister for responding comprehensively to my representations in respect of homes specially adapted for disabled persons, regardless of whether they were provided by their families or benefactors or as a result of court awards. As State provision becomes increasingly difficult for families of severely disabled persons to obtain, they have been forced to become more innovative in finding solutions themselves, usually from their own resources, to the long-term residential needs of their sons, daughters, sisters and brothers. When families have gone to huge expense to provide homes, it is unthinkable that they would also be asked to provide an annual property tax. The Minister has recognised that in giving a complete exemption, for which I thank him. I know the families will be equally grateful to him.

A complete exemption is granted in these cases but not in cases in which existing homes are adapted to accommodate a disabled person. Deputy Pearse Doherty highlighted the problem with this particular case. I am not sure what the thinking behind it is and I ask the Minister to clarify and think again about it. The explanation is that the reduction is limited to the lesser of two values: the chargeable value attributable to the adaptation work carried out on the property, and the maximum grant value under the relevant local authority scheme. That would indicate that the greater the grant, the greater one’s relief. That would make sense if the grant scheme was related in any way to the actual cost of the adaptation. Deputy Doherty is right in saying that different schemes applied in different local authorities. In some years, local authorities had no money and no schemes so people built with no grant. Sometimes the grants were means-tested and sometimes they were not. It was a moving goalpost as far as the grant scheme was concerned. This does not seem to be a good basis for deciding the relief now. Incidentally, I should declare an interest, as I received a grant many years ago. I have received endless queries, which is why I would like this clarified.

Another issue that arises in respect of this relief is that it does not apply to any adaptations done prior to 2001. This is surprising, because the grants after 2001 were extremely generous. As was the case with all problems in the years following 2001, money was thrown at it. I remember that back in the 1980s and 1990s the maximum grant from Dublin County Council was £6,000. Families took out huge additional mortgages to accommodate disabled children and family members. Many of those have since died, for obvious reasons, but many of them are still alive and living at home. It does not seem fair that they should be excluded because there may have been an increase in the value of the property as a result of that adaptation. I am of the view that sometimes those adaptations actually reduce the value of the house. I ask the Minister to consider whether the grant value has any relevance to the increase in value attributable to the adaptation.

I wonder about the decision to charge the tax to owners of rented accommodation, including local authorities as owners. I realise that from an administrative perspective it is probably cleaner and easier, but there is much to be said for everybody paying something. In many countries, this is dealt with through a habitation tax or a mixture of that and a property tax. It would avoid huge resentment that will exist not only in council estates between renters and those who have bought their homes but in private estates where councils have bought houses or where housing associations are renting out properties. We will have situations in which one person pays a substantial sum in property tax while others pay nothing at all. I recognise that local authorities will try to pass on some of the cost but they will not be able to pass on all of it, so the cost falls back on the people who are paying.

This is not an area that gets much sympathy, but it is another whammy for owners who rent out properties. They may be able to pass on some of the cost but generally they are regarded as fair game for any tax. They are not treated for tax purposes in a similar fashion to all other businesses. We must understand that we need a vibrant rental sector, even for economic reasons, because we need to encourage mobility for workers. We will always have people who will not be able to buy and will need to rent and people whom it suits to rent. If we regarded renting as a normal business rather than something unsavoury and distasteful, we might lose that obsession with owning property and avoid a future property boom.

Unlike others, I think the snitcher’s clause is a good idea, as is enforcement. All of the measures that have been introduced are highly desirable. Nothing incenses people more than some people getting away with not paying while those who are tax-compliant pay for them. I would like to change this law but I do not believe in breaking the law. As long as it is the law, it must be observed. I agree with the snitcher’s clause. It is in people’s interests, if they are buying a house, not to compound an error or deceit perpetrated by the pervious owner. Can the Minister tell me whether the reverse will also apply? If somebody has erroneously overpaid a tax, will it be refunded? When the property or a similar property is sold, it seems only fair that it should be repaid. It is inconceivable that there will not be cases in which people find they have overpaid and there will be a long queue of people going to the courts over the years unless it is made clear that it will be repaid. I suggest that now is the time to legislate for that. I have much more to say but I might keep it for another day.