Wednesday, 4 May 1994
Dáil Éireann Debate
9. Mr. Gregory asked the Minister for the Environment the plans, if any, he has to introduce a new home tax; and if he will make a statement on the matter in view of the widespread concern among many hard-pressed home owners.
13. Mr. Yates asked the Minister for the Environment if he will make a statement on the comments made at the recent IMI Conference in Killarney, County Kerry, in relation to the Government's proposals to merge the residential property tax and local service charges; and the anticipated revenue from such a source.
16. Mr. Rabbitte asked the Minister for the Environment in regard to comments made at the Irish Management Institute conference, if he will give details of the Government's proposals for a merged residential property tax/service charge; and if he will make a statement on the matter.
22. Mr. Creed asked the Minister for the Environment the status, timetable for implementation and purpose of the proposals made at the Irish Management Institute in Killarney, County Kerry, for the reintroduction of rates or a general property tax.
27. Mr. Sheehan asked the Minister for the Environment the status, timetable for implementation, and purpose of the proposals made at the Irish Management Institute in Killarney, County Kerry, for the reintroduction of rates or a general property tax.
40. Mr. Yates asked the Minister for the Environment if he will clarify the terms of reference and the membership of the committee the Government has established to review the merging of the residential property tax and local service charges; and the timescale within which it is intended that it will report to the Government.
51. Mr. Timmins asked the Minister for the Environment the status, timetable for implementation, and purpose of the proposals made at the Irish Management Institute in Killarney, County Kerry, for the reintroduction of rates or a general property tax.
56. Mr. J. Bruton asked the Minister for the Environment the status, timetable for implementation, and purpose of the proposals made at the Irish Management Institute in Killarney, County Kerry, for the reintroduction of rates or a general property tax.
62. Mr. Nealon asked the Minister for the Environment the status, timetable for implementation and purpose of the proposals made at the Irish Management Institute in Killarney, County Kerry, for the reintroduction of rates or a general property tax.
The Government is committed to reducing the overall burden on taxpayers, including householders. Against this background, there are no proposals to introduce any new local tax, to reintroduce rates or a new form of local property tax, or to merge service charges with any other tax. No committee has been established to consider any such arrangement.
The existing system of local authority funding is based on a range of Exchequer grants, combined with a variety of local income sources. The Exchequer grants comprise both general grants — notably the rate support grant — and specific grants, mainly capital in nature, related to particular expenditure programmes. The overall funding situation, and the situation in regard to particular programmes, is kept under review and is, of course, subject to modification and adaptation from time to time in the light of changing local and national needs, prevailing budgetary circumstances and Government policy. There are, however, no proposals for any fundamental changes in existing arrangements.
As regards service charges, the legal position is that these are levied at the absolute discretion of the individual local authorities. Whether or not a charge is made, and the amount of any charge, is a matter for the local authority itself.
Mr. Barrett: Will the Minister agree that it is very confusing for those of us on this side of the House to read in the  newspapers and hear on television and radio the announcement by the Taoiseach at the IMI conference in Killarney that the Government intends to merge the property tax and service charges and to reintroduce rates on houses and to hear the Minister say today that the Government has no intention whatever of introducing any changes in the local government taxation system? Will the Minister agree that somebody is telling lies——
Mr. Barrett: Having regard to what the Minister has told the House today, the Taoiseach misled the people who attended the IMI conference and the public when he said that the Government was about to reintroduce rates. What happened to the so-called committee which was supposed to be set up to examine these matters? The Minister has told us that no committee has been set up, yet the Government made a statement that there was a committee. Has the Government considered the Taoiseach's statement and where are the proposals referred to by the Taoiseach?
Mr. M. Smith: The Taoiseach has made it clear in the House on a number of occasions — his record speaks for itself — that it is both his and the Government's desire to ensure that the overall level of taxation is reduced. Like all of us, he was obviously anxious to scotch some of the unfounded rumours about the property tax and the thresholds which the Deputy's party signified to the electorate would be reduced. I have merely stated Government policy in my reply.
Miss Harney: I put down my question to the Taoiseach — that is why it appears in this form — but it was transferred to the Minister for the Environment. Can the Minister explain why the Taoiseach said, and I quote——
Miss Harney: Will the Minister explain why the Taoiseach said in Killarney that the Government was working on a plan to merge residential property tax with the existing service charges in one single tax and that proposals to that effect would be brought forward in next year's budget?
Mr. M. Smith: From time to time the tax strategy committee which operates under the aegis of the Department of Finance — I am not a member of that committee — puts forward proposals which are considered. The Taoiseach was obviously concerned to set out the future direction of the property tax as it relates to thresholds. As I have already outlined to the House, there is no proposal to  merge service charges with the property tax.
Mr. Barrett: Will the Minister agree that it is a very serious matter when the Taoiseach clearly states at a major business conference in Killarney that the Government, of which he is head, is considering merging the residential property tax with local service charges and that a single property tax will be levied on people's homes? Is the Minister seriously trying to persuade us that he does not know anything about the committee to which he referred? The credibility of the Taoiseach and the Government on this issue is open to serious question. I do not accept — and I do not think the Minister would expect us to accept — that the Taoiseach decided off the top of his head to merge two taxes and reintroduce rates on houses. Somewhere along the line——
Mr. M. Smith: I wanted to re-emphasise that there is no question of the reintroduction of rates or any merger of the property tax with service charges. Obviously the Deputy would like to have the Taoiseach's problems — presiding over a very good Government and an economy——
Mr. Gregory: Will the Minister agree that any new tax, such as the one proposed by the Taoiseach, would hit PAYE homeowners in Dublin hardest due to the high cost of houses in the Dublin area, the corresponding high mortgage repayments and the already crippling burden on the PAYE sector? Will he agree that people in these circumstances are already taxed to the limit or beyond it and that this is simply another example of the prejudice against Dublin which exists in the Government, which is led by the Taoiseach?
Mr. M. Smith: I reject out of hand any suggestion that there is a prejudice against any part of the country by the Government in so far as taxation measures are concerned. However, I accept that we have a high taxation economy. The Government has consistently tried to reduce the overall level of taxation so as to ensure that the burden is spread much more equitably. During the  past five or six years successive Governments, in which Fianna Fáil participated as a major partner, have contributed enormously to try to change that system.
Mr. Barrett: Is the Minister aware that the overall level of taxation, despite what he has said, has actually increased as distinct from reduced? Would he not agree that through heavy central taxes the public is paying a sufficient amount for services which they expect from the local authority and that any question of reintroducing rates would add to the tax burden of those who are already carrying more than their fair share of taxation? Will he confirm that he will not proceed along the same lines as he did this year when he used the whip to impose service charges on the residents of County Dublin under the threat of the abolition of the three local authorities?
Mr. M. Smith: Deputy Barrett is flogging a dead horse. There is not a JCB digger in the country that could resurrect that story with any credence among the public. In relation to the overall level of taxation being paid by the public, national income has increased enormously.
Mr. M. Smith: In 1987 when we assumed office, after four and a half years of a Fine Gael-led Government, we had income tax rates of 65 per cent, 48 per cent and 35 per cent, which are now replaced by a top rate of 48 per cent and a low rate of 27 per cent.
Mr. M. Smith: ——suggest different kinds of measures which could be under consideration. He made it absolutely clear that the overall level and burden of taxation was to be reduced and that these matters would finally be decided by Government.
Mr. Gregory: Does the Minister agree that what is required is not a new tax but an end to service charges, particularly in areas where people are already paying more than their fair share by way of PAYE, and the spreading of the tax burden to wealthy farmers and land speculators who can afford to pay more but, for political reasons, are allowed to escape the tax net?
Mr. M. Smith: There is nothing fundamentally wrong with service charges and they apply practically throughout the country. I understand from reports submitted to my Department that in over 90 per cent of cases charges are freely paid for the services provided by local authorities. Service charges are not a charge against the total cost of any service, they are merely a part of the maintenance cost not involving any part of the capital contribution. During the past ten or 12 years service charges have been the norm throughout the country and yield close to £50 million, which is vital to local authorities in the discharge of their duties and in the provision and maintenance of services. If Deputy Gregory had some other views as to how that money could be raised for local authorities I would be prepared to listen to him.
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