Sunday 23 November 2014

Homeowners in ten local authorities in line for property tax decrease

Published 04/09/2014 | 13:20

Alan Kelly TD. Picture: Tom Burke
Alan Kelly TD. Picture: Tom Burke

HOMEOWNERS in ten local authorities are on course to see reductions in their property tax bills next year.

Details released by the Department of the Environment show that eight different councils, including all four in Dublin, will be in a financial position to introduce reductions of 15pc.

Homeowners in Clare, Meath, Kildare and Wicklow can also expect the full 15pc cut, if councillors vote in favour of this measure later this month.

However, the government plan will prove controversial because it will result in Dublin property owners subsidising rural local authorities.

A government working group determined that while the property tax proceeds in Dublin were above estimates, councils down the country will be left short of cash.

As part of the legislation underpinning the property tax, 20pc of the proceeds are due to go to a central government fund, while 80pc are designed to remain in place to pay for services locally.

But in a bid to ensure that rural based councils avoid greater financial difficulty, millions of euro generated in Dublin will be channelled to places like Leitrim, Sligo, Donegal, Kerry and Tipperary.

The government is preparing to slash some other funding channels to Dublin councils in order to ensure rural councils stay afloat.

Senior Government sources said that while families in the capital will be paying for services in rural Ireland, some of the Dublin councils will still be better off as a result of the huge property tax windfalls generated on the east coast.

"This falls into the concept of equalisation," said a Labour source today. "We have to adopt this system to ensure the Leitrims and Longfords can afford their services.

But the Government decision means that Dublin authorities will be forced to fund rural counties where property tax revenues will not match existing funds from central Government.

The decision comes after ministers received a report from a working group of senior government officials who examined the issue.

The plans by Environment Minister Alan Kelly will see the introduction of "equalisation measures" which will result in a cut in central government grants for local authorities who collect large property tax revenues.

This will tie the hands of councillors who promised to slash the property tax rates by up to 15 per cent in the run up to the May elections.

According to Minister Alan Kelly,  the measures will create "fairness and balance" throughout the country.

“These measures will provide certainty and balance to the finances of local Government and give councillors a greater say in how their authorities are funded, ensuring 80pc of Local Property Tax is spent locally. All local authorities will be funded to their 2014 levels. ”

The local authorities facing the prospect of reductions in property tax:

Cork City, Kerry, Clare, Cork County, Dun Laoghaire-Rathdown, Dublin City, Fingal, Galway City, Kildare, Meath, South Dublin, Wicklow

The local authorities to be subsidised: Carlow, Cavan, Donegal, Galway, Kilkenny, Laois, Leitrim, Limerick, Longford, Louth, Mayo, Monaghan, Offaly, Roscommon, Sligo, Tipperary, Waterford, Westmeath, Wexford

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