Six out of 10 homeowners will get 15pc reduction in property tax
Published 05/09/2014 | 02:30
Six out of every 10 homeowners are in line for a 15pc cut in their property tax bills from next year.
More than one million households can expect an average reduction of €40 after the Government identified 12 councils which it said could reduce bills, most of which are on the east coast.
The Local Property Tax (LPT) was introduced to force households to pay the cost of providing local services. It replaces some central government funding, and any council which has taken in more in the LPT than they received from the taxpayer is allowed to reduce the tax rate by as much as 15pc.
The Government now claims that 12 councils can reduce the burden on families. Ten can reduce it by the full 15pc, and two by some 5pc.
The midlands and west are the biggest losers among the remaining 19 local authorities that cannot cut the rate unless they cut local services such as libraries, street cleaning and road maintenance.
Under the rules, councils retain 80pc of the tax collected in their area, with the remaining 20pc going to a central fund called the 'equalisation fund', which totals €102m.
This will be redistributed to councils which have not replaced Government funding with an equivalent amount from the property tax. Most are in rural areas.
Environment Minister Alan Kelly insisted that no council would receive less income from the LPT than they received from central funds.
"The Government has provided certainty in relation to top-ups for those local authorities with lower property tax bases," he said.
"These measures are necessary to create a balanced system of funding across local authorities. This will allow local authorities where property taxes are highest to implement a full 15pc reduction."
The decision to reduce or hike the rate rests with local city and county councillors. They have until September 30 to decide if any cuts should be implemented, to allow the Revenue Commissioners make the necessary arrangements to allow them become law for 2015.
Fianna Fail accused the government of "selling a pup" to the public.
"What they've announced does nothing to improve the position of local authorities. The public appear to have been duped and hoodwinked again," Environment spokesman Barry Cowen said.
"The vast majority of local councils will not be better off next year compared to before the LPT was introduced."
Ten counties can reduce the tax rate by 15pc. They are Clare, Cork County, Dun Laoghaire Rathdown, Dublin City, Fingal, Galway City, Kildare, Meath, South Dublin and Wicklow. Cork City can reduce by 5.4pc and Kerry by 4.2pc.
The local authorities needing top-ups totalling €102m are Carlow, Cavan, Donegal, Galway County, Kilkenny, Laois, Leitrim, Limerick, Longford, Louth, Mayo, Monaghan, Offaly, Roscommon, Sligo, Tipperary, Waterford, Westmeath and Wexford.
The 'average' LPT payment is €269 a year. A full 15pc hike would reduce this by €40.50.
People living in more expensive houses will benefit more. For example, a person living in a house valued between €500,001 and €550,000 pays €945 a year.
A 15pc cut would reduce the bill by €141.75.
The redistribution of money from larger authorities means, in effect, that councils with bigger populations and higher property prices are subsidising those in less-affluent areas.
Rural Affairs Minister Ann Phelan said it is important that rural and urban homeowners don't feel "pitted against one another" as a result of the government's plan.
"It's not in anyone's interest in the whole of the country to have pockets who aren't able to keep up with the rest," she said.
"Across government circles and local authorities, we've been talking about balanced, regional development and that is what we are about at both government and local level."
Ms Phelan added that Dublin and other cities had services not available in parts of rural Ireland, and that it was in "nobody's interest" that some parts of the country did badly.