Tuesday 12 November 2019

Majority of councils to hike rates next year a 'property tax grab' to affect a million homes

Unprecedented wave of post-election increases will hit households across 19 out of 31 areas

Review: Finance Minister Paschal Donohoe has delayed any decision on reforms of how the tax is spent. Photo: Steve Humphreys
Review: Finance Minister Paschal Donohoe has delayed any decision on reforms of how the tax is spent. Photo: Steve Humphreys
Kevin Doyle

Kevin Doyle

Almost a million homeowners will pay extra property tax next year after a record number of local authorities hiked their rates.

A 'property tax grab' in the wake of the local elections has meant that 19 out of the country's 31 councils adjust prices upwards, the Irish Independent can reveal.

The wave of increases has no precedent in the seven years since the Local Property Tax (LPT) was first introduced.

Just eight local authorities have retained the standard rate for 2020, compared with 22 this year. Homeowners in Dublin will be the only ones to see the tax reduced.

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Under the standard rate set by Government, the owner of a home valued at between €300,000 and €350,000 is liable for €585 in tax. However, local authorities have the power to raise or lower the standard rate by up to 15pc.

Ten counties have raised their prices by the maximum amount, which would add an extra €88 to the bill for a €300,000 home.

Another five counties pushed their rate up by 10pc, while four others will apply hikes of between 2.5pc and 7.5pc.

In each case the decision to hike prices was taken by councillors who won't face re-­election until May 2024.

The Department of Housing said it "keeps abreast" of variation decisions by local authorities but did not seek "to pre-empt or anticipate those decisions".

Asked whether there were any concerns about the dramatic increases across the country, a spokesperson said: "The department would not have any concerns or comments about local authority members exercising their statutory function in this regard."

The data shows a major rural-urban divide when it comes to the application of property tax - with councils in larger areas much less likely to raise taxes.

The four local authorities in Dublin lowered their rates for 515,000 homeowners, while Galway and Cork City Council made no change.

On the other hand, 15pc hikes were voted through by councillors in Clare, Donegal, Kilkenny, Leitrim, Limerick, Longford, Monaghan, Offaly, Roscommon and Sligo.

Tax for property owners in Tipperary, Wexford, Wicklow, Laois and Kerry will jump by 10pc.

There will also be smaller increases in Kildare, Carlow, Cork county and Waterford.

Overall, roughly 990,000 houses will be subject to a higher tax rate.

Each council must transfer one-fifth of its standard LPT income into a central 'equalisation fund', which is divided up among the less well-off regions. However, a local authority is able to retain any extra income raised through hiking rates for its own spending. The equalisation fund is already controversial as it will result in 10 areas providing subsidies to the rest of the country.

More than €40m paid by residents in the capital will be used to prop up rural local authorities.

The biggest winners in 2019 are projected to be Tipperary and Donegal which will get €16m each from the fund. Mayo and Waterford are in line for €11m each.

The Government has pledged to reform how the tax is spent by local authorities.

However, Finance Minister Paschal Donohoe recently announced he was delaying any decision on reforms until November next year.

So far this year, the Revenue Commissioners have collected €346m in LPT, with the compliance rate estimated to be in excess of 96pc.

Irish Independent

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