Property tax cut for thousands - but only in nine local authorities
Published 05/09/2015 | 02:30
Tens of thousands of households could receive substantial cuts in their property tax bills from January, Environment Minister Alan Kelly revealed.
Mr Kelly's officials have identified nine local authorities that can reduce the property tax burden on families while still being in a position to provide all essential services.
But almost all rural councils have been told that they are not in a position to introduce cuts next year because such a move would put funding to local services such as libraries and roads in jeopardy.
Figures released last night reveal property tax cuts are most likely to be on the cards for homeowners who live in areas were property prices are among the highest in the country.
Six local authorities, including the four in Dublin, have been told they have the flexibility to reduce bills by 15pc.
These councils are Clare, Wicklow, Dublin City, Fingal, South Dublin and Dún Laoghaire-Rathdown.
All six were given the same evaluation by the department last year and opted for the 15pc cut. This is despite warnings from some managers, including Dublin City's Owen Keegan, not to introduce the maximum reduction.
Meanwhile, a further three councils - Cork City, Cork County and Kildare - have been told they can cut bills by a smaller amount and still remain in a sound financial position.
The Department's assessment of the finances of both Cork City and County Councils is that they can afford to introduce a 10pc cut. Kildare County Council can afford a 7.5pc cut.
But the figures provided by the department will present a serious dilemma for a number of political parties.
Galway City and Kerry, for example, have been told that any cut to its property tax rates will impact on other services. This is despite the fact that last year, both councils were told they had wriggle room to introduce a cut. After significant debate on motions to proceed with the cut, both councils opted against doing so. But the fact that no such cut should be considered this year will disappoint householders in these areas.
"The circumstances of some councils have changed over the last 12 months and that is reflected in their assessments," said a Government source.
Under the current system, councils retain 80pc of the proceeds from the property tax collected in their area, with the remaining 20pc channelled into a Government-operated "equalisation fund".
The money is then distributed to less wealthy local authorities so as to ensure vital services can be provided.
While all councils in theory have the power to introduce a reduction, the prospect of jeopardising key local services is a crucial factor against reducing bills.
Nonetheless, some 14 councils introduced cuts of some form last year which illustrates that the department assessment is not always followed.
The department has not advised any council to actually increase property tax rates by up to 15pc. However, sources say that Sligo may be left with no option but to introduce an increase given its council's precarious financial state.
The decision to change the rates must be communicated to the Revenue Commissioners by September 30.