Wednesday, 29 June 1966
Seanad Eireann Debate
Minister for Local Government (Mr. Blaney): This Bill has a two-fold purpose. Section 1 proposes to extend to the 31st March, 1969, the period in which buildings may be erected, reconstructed or improved in order to qualify for the rates remission under the Local Government (Temporary Reduction of Valuation) Act, 1954. Section 2 will continue indefinitely the exemption from rating of farm buildings newly erected or rebuilt.
The 1954 Act, as extended by amending Acts passed in 1956, 1960 and 1963, provided for a two-thirds remission of rates for seven years on the valuation of new buildings and on the increased valuation of existing buildings which were reconstructed or improved, where the work of erection, reconstruction or improvement was completed not later than 31st March, 1966. The remission applies to buildings such as factories, offices, shops, hotels, houses and so on which do not qualify for a remission under any other Act.
This particular form of rating relief has now existed in local government legislation for almost half a century. The effects of the great number and variety of such concessions on the effectiveness of our valuation and rating system as an equitable means of distributing local taxation are being examined in the course of current investigations into the whole system of local finance and taxation. Considerable progress has been made with the investigations and the outcome may include the emergence of general  principles to govern rate remissions for the future. In the meantime, I feel that the existing concessions provided under the 1954 Act should be continued, on a purely temporary basis, up to 1969.
An exemption from rates for seven years was given by section 14 of the Valuation (Ireland) Act, 1852, for newly erected or reconstructed farm outbuildings. The period of this exemption was extended from seven to 20 years by the Local Government (Temporary Reduction of Valuation) Act, 1960, in the case of farm buildings built, enlarged or improved between 1st April, 1960, and 31st March, 1963. The completion date was extended to 31st March, 1966, by the amending Act of 1963.
It has been represented to me that the prospect of new or improved farm buildings eventually becoming liable to be rated has a disincentive effect on investment in such buildings by the farming community. Proper outoffice buildings are essential in view of the upward trend in the numbers and the acceptable standards of livestock. The prospect of eventual rating may genuinely tend to detract from the incentive value of the Farm Buildings Scheme. I feel it is desirable to remove any misgivings which may exist in this regard. Accordingly, section 2 of the Bill proposes that the valuation of any farm holding will not be increased in the future because of the provision or improvement of farm buildings. As farm buildings completed since 1st March, 1959, have so far been temporarily exempt from rating, they too will qualify for the proposed indefinite exemption.
The fact that the rating remission in respect of new or improved farm buildings will thus be continued on an indefinite basis, instead of the present temporary basis, will not, of course, preclude me in due course from reviewing that remission in the light of the general principles emerging from my current consideration of the whole question of rating concessions. I recommended the Bill to the Seanad.
Mr. McDonald: I very much welcome  this Bill as I feel that it is very necessary. The Title of the Bill is an Act to amend and extend the Local Government (Temporary Reduction of Valuation) Acts, and it is not only welcome but necessary. For the past few months many farmers and others have been rather anxious as to whether this legislation was to be continued.
The fact that this Bill is now introduced, and the fact that it is necessary, are indications that our entire rating system should get a new look and should certainly be overhauled. Grants for building, extending or improving living accommodation, farm buildings, or factories, are not achieving the results they achieved when they were first introduced. They were not increased and, therefore, they have not kept pace with costs of production.
People in general should be encouraged to improve their living accommodation, to extend their business premises, and to improve their conditions in general. For that reason the Bill is very welcome. It is not a general review of our rating system which is very old and very iniquitous. The big drawback in our rating system is that it takes no account of the ability of the ratepayers to meet the ever increasing bill for rates. The system is completely outmoded but it did serve a very useful purpose down through the years. The fact that it is a difficult problem should not deter us from tackling it and endeavouring to find a solution which would be fair and just to all.
There are so many new ways of gathering taxes that surely it is within the competence of the Government and the Civil Service to devise a more just scheme. There are very many instances throughout the country of economic holdings with small dwellings and little or no outoffices paying less rates than uneconomic holdings with big houses or dwellings and a considerable number of outoffices. This is something that should be gone into.
The present rating system is completely inflexible. Cottiers pay their rates on the same valuation when their families are small and being reared as  when there are five or six of the family earning wages and bringing wage packets into the cottage every week. In the same way when the family have all gone from the home and the parents are living on a small pension the bill for rates is still there. The time must come when the present inflexible system will be changed and then there will be a completely new look at this problem.
The same applies to urban dwellers in our cities and towns. It is extraordinary to find people not only in the cities but in our rural towns paying up to £50, £60, £70 and £80 a year in rates, and it is extremely difficult to effect a reduction in valuation. With the ever increasing ways that are being found to get alternative methods of taxation, surely someone could take a look at our rating system and devise a more just form of this means of local taxation.
The rating system is mainly responsible for the regrettable demolition of many of our big houses on estates and farms throughout the country. These are big mansions or Victorian houses which would cost perhaps £30,000, £40,000 or £50,000 to build today. I know they are of little use to the present occupier if his occupation is solely agriculture or farming, but most of these big houses are in a fair state of repair and they are being demolished solely because the people cannot afford any more to pay the rates on them. Therefore, they must go. Even though these residences or mansions were built in a period which we do not particularly like in our history, if they are in good repair people should be encouraged to keep them because surely they could be put to better use than just destroying them.
The people who find themselves in possession of these big houses are also the victims when it comes to the bimensal charges fixed by the ESB. The ESB levy their charges on the floor area and do not take into account either the cost of connecting the current or how much, if any, will be used.
The main objection I have, in common with most people, is that the  rate collector does not care two hoots where the ratepayers find the money so long as he gets it. Perhaps there has been a slight improvement over the past few years when in most counties the rate collectors were changed from poundage to salaries. Of course, this has been most beneficial to the rate collectors but in most cases they have grown a little more sympathetic. It is to the credit of the Irish people in general that they are very honourable and in the vast majority of cases they pay the rates, especially when they have the money. It is good to know that our rate collection in most counties is over 90 per cent. That shows that the people will, if at all possible, endeavour to meet their commitments in this regard. I certainly would like to see a very definite effort being made to tackle this very vexed problem because we now find that the rates are increasing year in and year out and even though there Is this redemption on increases in the valuation the rates still present a very formidable bill.
This measure, as introduced in the Seanad tonight is, I think, a Bill that any Minister likes to introduce because it does not cost the Exchequer or the central authority anything because the valuations that are reduced or exempted are really spread over the rest of the ratepaying community as rates are struck on the effective valuations and, so, while some people are getting reductions in valuation the reductions they get are made up by them and the rest of the ratepaying community.
My Party's policy on rates announced last year was to completely derate all the farms which had a total valuation of £25 or under. We came to that conclusion because we believe, and we see, that the owners of uneconomic holdings are being forced to pay rates on their property and on their building without any regard for their ability to pay. That is in contrast to the workers or people living in the urban community who are subject to income tax. Lots of people find it distasteful to pay income tax but at least those paying income tax have an income from which to pay, but the ratepayers are not in the same position.  They pay rates irrespective of whether they show a profit or a loss or whether they make any money throughout the year or not.
I am sure the Minister will not be impressed by any Senator who advocates a greater reduction in rates, but I feel that this is a problem that must be met sooner or later. The great fear in rural Ireland at the present time is that people who are just about able to make ends meet are endeavouring, at all costs, to keep their overheads down, and the only possible way people can do that is to keep an eye to their rates and their rate bills and if the cost of administering our counties increases by leaps and bounds each year this is indeed becoming a very tough problem.
I would urge on the Government to give very serious thought to this problem. I saw where the Minister said that if we were to abolish rates we would also abolish the local authorities but I could not agree with that point of view. I would only advocate that the rating system should be changed, inasmuch as it would be a little more flexible for people who could not pay rates, or for people who find themselves in the cycle of life, either starting off with high expenses or retired on fixed incomes or pensions. They should have some body or machinery to apply to to have their effective valuations reduced into line with their earnings.
I feel that if people knew that their rent or their rates or their income tax was going to be at a set percentage of their income there would be no objection to it. I cannot understand in a small country why we must have so many methods, so many means and so many different bodies collecting rates and taxes from us. I think that if we could devise a system of having only one body collecting both rates and taxes together it would be much more economic in the long run.
I feel that this is a very comprehensive problem and while the temporary measure before the House tonight is welcome, I am disappointed that it is only proposed as a stop-gap  or temporary provision, and I would urge on the Minister and the Government to do all in their power to bring in wider legislation which will give to the people of Ireland, the people in both town and country, a more flexible system whereby those who are hard-pressed or down in their luck can appeal to somebody and we should not still be retaining the services of the sheriff who I feel has not left very happy memories for many an Irish family. I wish to welcome the Bill.
Mr. McAuliffe: I also wish to welcome the Bill and I think it comes perhaps a little too late. Having taken an interest in people who have been looking for grants from the Department of Local Government, I found many people who were terrified to make use of these grants, when we had them as we have not supplementary grants now. They were afraid to proceed with the work of improving any farm buildings or their own private houses just because they were terrified of the new valuations that were likely to arise as a result of the improvements. I know people in towns who are still terrified to improve their dwellings and their shops.
I had occasion a very few years ago to meet a person from Mullingar who had improved the front of his shop. His valuation was greatly increased and he had to go to the circuit court and that cost him £30. He got a reduction of £1 in the valuation as a result of the circuit court proceedings, and he said it would have been much better for him to hand the increased rates to the county council as it would have been of some use to the county instead of giving it to a junior counsel who tried to get a reduction in the court.
Senator McDonald said he would like to see a new rating system. I really do not know what Senator McDonald wants if he is looking for a new rating system. The people he represents are the farming community and they at the present time have really no fault to find with the present rating system. Seventy-five per cent of the holdings in Westmeath are under £20 valuation. That might surprise people  here. I should like to know what the valuations are in, say, Donegal, Leitrim and Cavan and counties which are supposed to be poorer. They pay one-tenth of the rate. If it is 50/- in the £1 their rates should be £50 if there was no remission. They pay £5 on the first £25. If anyone wants a new system of rates I would say that they should have their heads examined, because if they come into the income tax code quite a number of people who are getting away with murder in the farming community today will be much more hit by any new system which might come in. If we scrap the rating system we have as regards rural Ireland then we are going into some sort of tax on property or income tax or some other type of tax which will hit the people much harder than they have been hit for quite a long time.
He also speaks about the big house and the valuation of the big house. Most of the people are demolishing these big houses, and I am not too sorry to see quite a number of them demolished, because we tried on a few occasions to make other use of them and found that we could not. When we tried to deal with them to make a home for retarded children, turn them into a vocational school on a temporary basis, or something of that kind they were totally out of date as regards converting them into any useful purpose. I have no regrets that these big old mansions with basements and everything of that kind are going.
Nobody wants them no matter how much land they have, because everywhere in the country there is the question of domestic help and you will not get anyone to come into huge barracks of houses and work in them and do the cleaning that would be expected in a house of that nature.
In the Housing Act the Minister would not go beyond 1,500 square feet. I hold that he was absolutely wrong in not going beyond that size of house, because it is easy to cod the Department and the Minister. All you have to do is put an office next to the house, leaving a door, and when you get the grant you can go out and  live in it. Every man should be allowed to build a house according to his needs. I do not think that anyone in the country will build a villa that he does not require. He will just build a house that will accommodate his family at the time he builds it.
There is something here that I do not exactly like about the Bill, and it is the last paragraph in the Minister's statement, the fact that in the rate remission in respect of new or improved farm buildings, while it is to be continued on an indefinite basis instead of on the present temporary basis, this will not preclude him in due course from reviewing that remission in the light of general principles. In other words, though the Minister gives encouragement under this Bill to get people to go ahead and make their improvements, put up farm buildings and everything else, will he at a future date come out and say: “I have you where I want you. I will do a job on your building and put on the rate accordingly”? I can see that happening if the Minister is short of money. It would be a wonderful way of collecting more money by saying to the people: “No increase in rates now”, but in a few years time after the people have taken him at his word and gone ahead with building that they would never have done otherwise, if there was an increase in rates, to come back at some future date and collect according to the particular buildings that have been erected. I do not like this paragraph. The Minister covers himself there. He can say in ten years time: “When I passed that Bill I told you that I did not make you any promise about the future”. It is for that reason that I would like to ask the Minister to make a definite statement that people who modernise their buildings during the next ten years will get the benefit of the present Act though there may be something in store for others who come in at a later period. I do not like that last paragraph in the Minister's statement, because I believe that if people are led up the garden and make improvements during the next few years he may then step in, increase their valuations and collect his taxes.
Mr. Honan: I should like to welcome particularly section 2 of the Bill, because in a county like Clare, as in most of the western counties, 78 per cent of the total valuations are under £20. Notwithstanding the generous grants which the Minister did provide to aid people to reconstruct their houses or provide new houses for themselves there is still required from them a certain amount of borrowing. The idea of being faced with the repayment of loan plus an increased rate was an absolute deterrent to taking any steps to modernise their housing conditions. I think that section 2 of this Bill will at least remove one of these conditions and will add an extra incentive to do something positive now. In any small holding of under £20 every little economy is vital. I have no doubt that even now the knowledge that they can build a new house or reconstruct their present one and have no fear of a visitation from the valuation office will be an incentive to them and I am sure will accelerate the reconstruction and building programme.
So far as the rates question is concerned, if somebody could devise a scheme under which we did not have to pay any rates I would be delighted, like everybody else, but I do not think that for the small farmers, particularly under £20, the rate is a serious problem. Farmers have expressed the opinion to me on several occasions that if they got services something approximating to what they have in the urban areas, if they had good roads, water supplies and fuel and other things reasonably available, they are really not deterred by the rate. It may be that in the bigger places where the farms are larger there might be a case for a change in the system, but I think that in the interest of the small farmers, as Senator McDonald has said, there is nothing wrong with the present rating system. In all the schemes that I have seen projected I see no more equitable way of dividing the rural bill amongst those who live in the community than the present rating system. There may, of course, be cases like Senator McDonald said where you have a house that you should not  have. If it does not take in the holding that will create a hardship. Generally, I believe that the farmers themselves realise that the cure might be worse than the disease, and they are prepared to go along with the present system. The Minister is providing good service in this connection, and I am sure that it will bring rewards in the house building and reconstruction programme.
Minister for Local Government (Mr. Blaney): We have had a run over the housing grants, ESB tariffs and so forth, and I do not intend to follow on the same lines but to get back a little more to the matter at issue, which is the question of the valuation remission Bill we have before us and to say in regard to it that what we are doing here is, to a large degree, a continuation of what we have been enjoying for some considerable time, as I outlined in my opening statement here, at the same time going a little further in so far as remissions on farm buildings are concerned.
The fears expressed by Senator McAuliffe about the let-out I have given myself at the tailend of my introductory speech that I am likely to come along ten years from now— the assumption for which I am very glad is that I will be here ten years from now—are unfounded. If there is to be a change that change would be done by legislation taken into both Houses for discussion. I would be amazed that whoever might bring in such a change would call a halt to the indefinite period or that this would in any way curb the remission already earned by those who will have built within the period of the currency of this particular Act, or until it is amended or repealed. If there was to be a change I would think that that would be a termination of the date and that those there after that particular termination date would no longer be entitled to the benefits of this remission. This, I think, would be the reasonable approach by whoever might be around to do that ten or 20 years from now. But the reason for it, as the House may be aware, is that quite a wide investigation is going on for a considerable time now  into this whole matter of local finance and taxation. Indeed, I feel at times rather annoyed that we have not reached a point where we could, as a Government and I as a Minister, have something more positive to say as to what the future holds in regard to this particular matter, as to whether we are to have a new system of local taxation or whether we are to amend the system we already have with the inequities which are in it, wipe them out and have correct and proper action taken to streamline the system which, over the years, has stood the fair test of time.
The committee set up by me some considerable time ago reported by way of first interim report. A summary of that report was published by way of a White Paper or a release of some kind or another. The sole purpose was to bring to the notice of the public as a whole and to those immediately interested in rating the difficult problem of the rates system and local taxation as a whole and that there was no ready alternative solution to raising moneys locally than that in some way or another based on valuation, not saying that the present system is absolutely the last word in that regard. But we had it published for this purpose—to bring to the knowledge of the public the difficulties of the situation and, at the same time, in the hope that it would provoke, by its publication, discussion and, arising from that public discussion, some worthwhile suggestions as to an alternative or improvement. The sad fact is that while it was last October or November that publication was issued and publicised, not one single proposal as to an alternative or improvement has since been forwarded to my Department or indeed, to any other Department, in so far as I am aware.
Mr. Blaney: I am rather sad that it should have happened but possibly I am not surprised either because I have had quite an interest in rates for many years before I came into the Department of Local Government. I have long since reached certain conclusions  in my own mind and those who may have had close contact with me in my days in local authority public life may well know my views but I do not intend to express them at this particular juncture for the simple reason that I do not want in any way to appear to be prejudicing the conclusions of the committee which I set up to report on this matter. Therefore, what views I have about this—and I have had quite strong views about this for a long time—I do not intend to give here this evening.
Let me come back then again to the real issue in this whole matter and to invite here, as I have invited in the Dáil, from members of this House any proposals they may have to remedy any of the anomalies which exist in the present system or to suggest an alternative which might be workable. I will welcome any such proposals from any of you at any time in the not too distant future. They will be carefully examined and considered and will, if found useful, without doubt be incorporated in any new changes we propose to make. As I have said, these proposals or suggestions will be carefully considered from any source regardless of what that source may be.
As to the Fine Gael policy of derating the first £25 valuation of land, this, of course, is a very easy thing to do—make promises when, in fact, you are not in a position to have to foot the bill for them. Let us look at the position and realise that when Fine Gael had a majority at certain times the situation in regard to local taxation was based on the same system as we are operating now. One might ask is this a new-found policy or did they not see any fault or anything wrong with the system that they had and did nothing about? One could even go further and remind them of the situation in 1955-56 when the total amount of agricultural grant which went to the relief of land rates was £5.2 million which meant, at that time, 46 per cent of the rates on land and that in the year 1966-67 this grant will have risen to £13.32 million, representing 63 per cent of the rates on land. This is what we are doing while, at the same time, we are in many ways being castigated for  not doing it quickly enough and for not doing much more. Indeed, I should add that over the 11-year period the net rates on land have remained almost static and that in a period of 11 years when money values have continued to depreciate and costs continued to rise. This, I think, is a fair indication that while we have not found the answer or the alternative to the present complaints about our rating system as a source of local taxation, nevertheless we have not sat and done nothing whatsoever about the situation. We have contributed quite considerably in this particular regard and I would further say to the Senator who has made this point, and to Fine Gael in general, that at this present juncture we are abating 80 per cent of the first £20 of all land valuations in this country at the moment. I may as well give the House the statistics in my own county and tell you that 89 per cent of all the farms in my county are under £10 valuation. I heard somebody say that 75 per cent of theirs were under £20. Eighty-nine per cent of all the farms in my county are under £10 valuation. Therefore, only 20 per cent really falls to be abated. This applies in varying degrees right down the west and across the country, to a lesser degree as the farms increase in size and the valuations increase proportionately; indeed, in many cases they increase more than proportionately relating to the value of the land as we move across the Midlands and down to the east coast.
Rates have increased. There is no question about that. Nobody tries to hide that fact. They have increased fivefold since 1939. This is not the most striking feature. At the same time, in the same period, moneys by way of State grants have increased ninefold. We find that rates netted 52 per cent of local expenditure in 1938/39. In 1959/60 they netted 40 per cent but they are only 32 per cent this year. On the reverse side State grants for those same years were 39 per cent, 43 per cent and this year 51 per cent of the local revenue expenditure. Somebody may ask where the difference comes if you add those  figures for the same years. Those figures are related to the expenditure from the local authority.
When you talk about the problem of increasing rates those are things which should be kept in mind. We should realise that a great deal is being done in this regard despite the fact that no final solution has been reached by the Government nor has it emerged in theory from anybody else. I only hope we could have the experience of all those people who see the faults which are there at present but very few of those people come forward with concrete solutions. Taking all round, this is only a very small and temporary measure in the sense that it is related to temporary valuations from 1954 to 1963. It has been criticised on the basis that it is temporary. This is something which cannot be taken too seriously for the reason that it was never intended to be anything other than temporary. I hope that we will get to the point when we can emerge from this and that we will find a remedy for the situation.
I hope we will have some conclusions from the committee now investigating this matter from which we may find a remedy to improve the situation. I sincerely believe that the position in regard to the inequities of the present application of the rating system can be improved. This is the least that can be said at the present time. If this and nothing else can be done, I hope that all those who complain about the inequities at the present time, will support legislation brought in to change them and that they will agree that those who pay less at the present time will have to pay more in the future. It is all very well to say that certain people are paying too much at the present time and nothing is being done about it. It must be realised that there are other people who are paying too little at the present time and that they will likely have to pay more at some future date.
It has been said that our present rating system is lagging behind present day costs. It is quite true that it is lagging behind present day costs and  modern values and there are now glaring variations in property valuations of one kind or another. If we are to deal with this on a proper basis we must be prepared not only to reduce those who are paying more than their share but to seek an increase from those who are paying less than their share at the present time. I hope that those who at present criticise the fact that some people are paying too much and tell us what is wrong with our present system will not criticise us if we ask those who are paying too little at the present time to pay more. I hope we will receive support from those people when that time comes.
Mr. McDonald: The Minister gave some figures and I should just like to point out that the agricultural grant is only part of the agricultural rate. It is a misconception to think that agricultural rates have been static since 1951 when the rates the farming community pay have been increasing yearly. As well as that, the incomes of farmers have not increased very much since then. As a matter of fact, if you take  barley, it was 50/- then as compared with 45/- last year. The very fact that the Government give 80 per cent remission on the first £20 valuation of rates is an indication that there is a serious problem there. In my opinion this section of the community should be completely relieved of this taxation which does not take into account their ability to pay it.
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