Council chief's warning over 'disappointing' impact of property tax
Published 28/12/2016 | 02:30
The head of the country's biggest local authority has criticised the Local Property Tax (LPT) for being "extraordinarily disappointing", saying despite collecting almost €80m a year, the council was just €4m better off.
In an exclusive interview with the Irish Independent, Dublin City Council chief executive Owen Keegan said the Government had withdrawn funding on the basis that local authorities had additional funding from the LPT.
But this amounted to just €4m a year, he said. The rationale for the LPT had been "undermined" because of the limited impact it had on council finances.
Figures from the Department of Housing, Planning, Community and Local Government show that city and county councils across the country will have collected €473.5m in LPT this year.
Dublin City Council levies €77.5m, but 20pc or €15.5m will be returned to the so-called 'Equalisation Fund' and dispersed to smaller councils.
Councillors also reduced the rate by 15pc, resulting in another €11.6m being lost. Mr Keegan said that instead of being left with around €50m in additional spending, the Government cut funding so the council ended up being just €4m a year better off.
"The property tax has been extraordinarily disappointing," he said. "The liability of properties in Dublin City Council, if we applied the full rate, would be around €80m.
"Some 20pc is taken to fund other local authorities, which is fine and was a government decision. The members reduced it by 15pc.
"The balance - all bar €4m - was substituted for capital and current grants.
"The discretionary impact for us, from €80m, was €4m. It is effectively a national property tax. It's being spent on substitution for capital and revenue grants. My budget is around €800m, it is really of marginal consequence."
He said the introduction of the tax had raised expectations about levels of service improving, but this was "difficult" when income levels were "static".
LPT rates are frozen until 2019, and he had urged elected members every year not to reduce the levy.
The levy should have been based on property size and price, he said.
"The property tax is perceived to be an unfair tax in Dublin and other urban areas. Apart from having to pay more (in Dublin), they (the Government) top slice 20pc.
"I had reservations about linking it to value. I would have linked it to size and value. In such a short space of time its rationale has been undermined.
"It's raised expectations about levels of service and we'd love to be able to respond. We fully recognise the need to restore service levels, but it's a difficult challenge when our income is at best static."
He added that income had been cut from around €1bn a year at the height of the boom, to some €800m or so today. Staff numbers had fallen by 25pc.