LPT report casts light on disparity in house values
The review of the Local Property Tax (LPT) is welcome for two reasons. Not only does it highlight shortcomings in a tax collection system introduced just two years ago, it also shows the wide disparity in property prices across the country.
While we have always known that house prices were more expensive in Dublin and other large cities, it's astonishing to think that in May 2013 there wasn't one home in Longford or Leitrim valued at more than €250,000 for the purposes of calculating the tax.
Compare that with Dun Laoghaire-Rathdown in south Dublin. Of the 81,900 homes in the county, some 46,100 (56pc) were valued at €300,000 or more.
The amount collected in the LPT in Dun Laoghaire is also worth noting, some €52m. However, of this, almost €40m is paid by owners of these €300,000-plus properties. That equates to an average payment of €865 each - compared to an average national payment of just under €260.
The report notes that of the 1.8 million homeowners who pay the tax, 3,700 are living in properties valued at €1m or more. While a small number, what's of concern now is that property prices continue to rise, so how long will it be before other more 'modest' homes join the €1m-plus bracket?
The Thornhill report notes that around 110,000 taxpayers could face an increase between €270 and €540 a year in their LPT bills, and all because the shortage of homes coming on to the market is fuelling hikes. While the homeowner may never benefit from rising prices, they will pay.
This report includes 13 recommendations, at the centre of which is changing how the tax is structured.
Instead of the rate being set nationally, each local authority should be given a targeted amount to collect, and the tax rate set locally so this target is achieved.There are other suggestions, including removing the exemption for new and previously unused properties purchased from developers. There's also a suggestion it be renamed the Local Council Tax to "emphasise that it is a tax raised to pay for local council services".
Call it what you will, but if more than half of all families risk being hit with higher tax bills because of rising property prices, clearly the system needs reform.