Council tenants to escape bill for property tax in new year
COUNCIL tenants are set to escape paying the property tax in the new year, while squeezed middle-income earners get hit with the full rate, the Irish Independent has learnt.
Despite all council houses being placed in the lowest tax band of just €90 a year, the tax won't be passed on to tenants through higher rents.
Councils didn't have to pay property tax this year – but do have to pay it in 2014 and were supposed to pass on the cost.
In the year of the local elections, councillors won't pass on the cost to tenants.
Due to lobbying by councils, all council houses in the country were automatically valued at under €100,000 so they qualified for the lowest property tax rate of €90 per year. And they were given a six-month respite, so that their bills did not fall due until the new year.
But councils are not going to pass on the €17m cost of the property tax to council tenants by hiking their rents in the run-up to local elections in May.
It means that families in 130,000 council houses around the country are set to escape a property tax bill of €45 for this year and €90 for next year.
But families who have taken out mortgages to purchase their own homes will have to pay the full yearly rate.
This even includes former council tenants who have bought their own homes, while those living in council houses next door to them will not be paying the property tax.
The councils will be paying the property tax out of their own budgets and they may have to cut services to find the extra cash to pay the bill.
Reform Alliance senator Fidelma Healy Eames said middle-income taxpayers were being forced to fund the property tax for all the social housing units in the country.
"The squeezed middle has been bled dry. There is no equity or fairness in this approach," she told the Irish Independent.
Dublin City Council has over 26,000 families in council homes, who would otherwise have had to pay a rent increase of around €1.70 per week to cover a year's property tax.
The council confirmed it would be paying the property tax itself. Lord Mayor of Dublin Oisin Quinn said: "We won't be passing it on."
Cork City Council said that its budget for next year was not expected to include any increase in housing rents to take account of the property tax.
It is understood that Galway City Council is also not going to pass on the property tax to tenants in its 2,000 council homes.
The Government had excluded council homes from the €100 household charge but included them for the property tax.
At the time, Finance Minister Michael Noonan said this was to ensure there was no different treatment of houses that were occupied by council tenants and those that were privately owned. It was widely expected this would lead to council tenants paying the property tax as well as private homeowners.
But Mr Noonan's property tax legislation put the onus on councils to pay the property tax themselves and made it optional for them to pass on the tax.
Ms Healy Eames called for council tenants to pay €1 per week towards the property tax in increased rent payments.
"We need to look at ways to reverse this cycle, by empowering them and giving them every chance to make a contribution, no matter how little. Only then are we treating them as equals," she said.
The Irish Independent contacted a number of other councils to ask if they would be passing on the property tax to council tenants, including Sligo County Council, Donegal County Council and Limerick City Council. They could not be contacted for comment.
The Local Authorities Members Association (LAMA), which represents councillors, said it had made no collective decision yet on whether to pass on the property tax.
But LAMA general secretary, Fianna Fail councillor Noel Bourke, said he believed that council tenants should be exempt.
"I know it's relatively small money because council houses wouldn't be valued that high. But it's a lot to people who are in social housing," he said.
Meanwhile, at the Labour conference, party members embarrassed the leadership by making it official party policy to exclude huge numbers of people from the property tax.
SIPTU general president Jack O'Connor pushed through a motion calling for a property tax exemption for families on social welfare, low incomes and those who had high mortgages after purchasing their houses during "the bubble years".
However, despite the passage of the motion, there is no chance of the Coalition changing the property tax legislation to take account of it.