Friday 26 December 2014

Property tax proposal a 'fundamental breach' of Coalition deal – Gilmore

Niall O'Connor, Fionnan Sheahan and Daniel McConnell

Published 04/07/2014 | 02:30

Eamon Gilmore has announced he is quitting as leader of the Labour Party
Eamon Gilmore has announced he is quitting as leader of the Labour Party
How the Irish Independent reported the property tax in the past two days
How the Irish Independent reported the property tax over the past two days

TANAISTE Eamon Gilmore has said Government proposals to prevent councils from reducing the property tax bill for homeowners would represent a "fundamental breach" of the political agreement between Fine Gael and Labour.

But Taoiseach Enda Kenny says the Government's core point is "no council will be worse off starting off" when the switch to funding from the property tax comes into effect next year.

The intervention by Mr Gilmore exposes the deep rift in the coalition over the flexibility that should be given to councils to lower the property tax rate for homeowners in their districts.

A confidential government document shows people living in Dublin city, south county Dublin, Kildare, Wicklow, Louth, Meath, Galway city, Kerry, Clare and Cork city and county will lose out under the proposals.

Only Dun Laoghaire and Fingal county councils will still have enough spare cash left – even after their grants are cut – to pass on a property tax reduction to residents.

The other councils on the list will see their property tax windfall eroded by cuts in funding elsewhere.

A planned cut in the property tax for homeowners in these areas, where there will be a property tax surplus, is causing a deepening split in the Coalition. So far the Cabinet has failed to sign off on the plan.

Fine Gael councils want to use the extra money to pay for services currently funded by the Exchequer. Labour wants to give hard-pressed householders a break by reducing their property tax rates.

Mr Gilmore expressed his strong opposition to the plans, which were revealed in the Irish Independent.

He said the tax was built on two principles – that there would be flexibility for each council to adjust the rate by up to 15pc and that 80pc of the proceeds collected would go towards delivering local services.

"I'm very concerned I have to say, at what I've read in your newspaper that there may be some departure from those two principles," he said.

"Those two principles were key cornerstones of the way the property tax was designed. "That was first of all that when the property tax was going to be high, that local authorities would have the flexibility to reduce it by up to 15pc, and I want to see that happening," Mr Gilmore added.

"Secondly, I am very concerned at the reports that I am reading in your newspaper about plans to claw back the proceeds of the property tax from the delivery of local services in certain areas.

Develop

"If either of situations were to develop, it would be a fundamental breach of the way in which the property tax was designed. It would be a fundamental breach of the political understanding that was reached at the time the property tax was agreed and it would be something I would be very strongly opposed to."

Asked to respond to Mr Gilmore's comments earlier in the day, Mr Kenny said the legislation allows for a reduction in the tax if the members of the council wish to do that.

"This is about devolving responsibility and authority to elected members. Obviously councillors have to publish their budgets so the people will know the services they will get for the taxes they pay," he said.

"The only thing that have been agreed here is that 80pc of the local property tax be retained by the local area and that no council should be worse off than it was last year. The details of that still have to be worked out.

"I haven't seen the Tanaiste's comments. But we had instructed our people before the local elections that we would reduce property taxes if it were possible in some of the council areas."

He added: "It is not possible in many of the council areas. But nobody will be worse off than at the start of this process and that 80pc will be retained in the area. But the details of that still have to be worked out."

Mr Kenny also played down suggestions the property tax would give councils additional money, rather than replacing existing funding.

Irish Independent

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