Fionnan Sheahan

Tuesday 29 July 2014

Big councils can absorb additional expenses

Fionnan Sheahan

Published 30/06/2014|02:30

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Overall the average national asking price has increased for the first time in about eight years
Overall the average national asking price has increased for the first time in about eight years

PROPERTY tax cuts were supposed to be the big policy discussion of the local elections. Government confidence, cutbacks in services and stealth taxes dominated instead.

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The Labour Party was planning to campaign on a pledge of their councillors ensuring there would be a rate cut, particularly in urban areas.

The junior coalition party was even planning to gazump Fine Gael by making cuts in property tax in cities the central plank of the campaign.

Fine Gael would be in a sticky position as small rural county councils wouldn't be able to match the fat wallets of their city counterparts.

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.

Provided councils can balance the books, they can cut the rate in their area by up to 15pc.

(On the flip side, if the local authority is short of cash, it can up the rate by the same amount.)

But back in February it emerged it wasn't going to be so straightforward as the Coalition was drafting a plan to devolve more powers to local authorities, which will also result in them footing the bills for services that are currently paid for by central government.

The development would hit homeowners in the cities, in the particular, as they had bigger populations with additional money being soaked up by additional costs. The four local authorities in Dublin alone will have €174m sloshing around in their coffers.

The plan was to give councillors the responsibility and powers they wanted, but these would have to be paid for."

Even with the additional costs, though, the bigger councils should still have enough funds to have a rate cut, assuming an ability to keep their budgets in check.

The Economic Management Council has been told more than a dozen councils should be able to cut their rate based on the "current estimates".

What impact the tinkering has remains to be seen.

Irish Independent

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