Friday 28 November 2014

Most homeowners feel property tax rates will rise next year

Fionnan Sheahan Group Political Editor

Published 09/06/2014 | 02:30

Phil Hogan TD at a news conference on details of the water charges
Phil Hogan TD at a news conference on details of the water charges

MORE than half of homeowners believe their property tax bill will increase next year, an Irish Independent/Millward Brown opinion poll reveals.

Despite councils having the power to reduce the property tax in the area by up to 15pc from next year, just one in 20 believe their bill will be reduced.

Under the property tax law, councils will have the power to increase or decrease the local rate by up to 15pc depending upon their financial position.

If councils feel they can manage their budgets, they can cut the property tax to be paid by homeowners in the local authority area.

However, if the council needs more money to balance the books, it can increase the rate.

Councils in Dublin, in particular, are expected to get a windfall when 80pc of the property tax revenue goes directly to the local authority where it is collected.

The huge increase in income streams, particularly in urban areas, was expected to result in cuts in the levels of property tax paid in the cities. Due to the larger density of population and properties, councils in large urban areas will get a bonanza next year when they get to keep €4 out of every €5 collected in property taxes.

The poll finds 54pc of people believe property taxes in their area will increase next year, with this view stronger among Sinn Fein voters at 63pc, 55- to 64-year-olds at 60pc, higher earners at 60pc, and people living in Leinster at 57pc.

More than four in 10 (43pc) believe property taxes will be maintained at their present rate, with their stance higher among Fine Gael supporters, 43pc, people living in Dublin 40pc, and Labour voters, 42pc.

The Labour Party had planned to make a promise to reduce property taxes the central plank of their local elections campaign.

The party had planned to pledge that its councillors would work to ensure councils they were in control of managed their spending to ensure property taxes were cut.

But the backlash against the Government parties dominated the local elections campaign, with property taxes barely being covered in the debate.

This year, the proceeds of the property tax are going to run Irish Water, before it gets its own revenue stream.

From next year, 80pc of the property tax will go directly to the local council, where the money is collected. The remaining 20pc goes into a central pot to distribute to councils across the country on the basis of who needs it most.

At the same time, councillors will have the power to cut the rate by 15pc in their area, provided they can balance the books.

The expectation was that councils in large urban areas would have a surplus from the property tax collection and would be able to redistribute the funds.

But a possible sting in the tail is councils having to pay for additional services – currently paid for from central Government funds – which will soak up any extra cash in areas with bigger populations.

Councils may be told to pay for more services, such as the provision of housing, rather than being reliant on Exchequer funding.

Irish Independent

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