Monday 27 January 2020

Revealed: 600,000 homes facing hike in property tax bills for 2017

Cash-strapped councils are raising the rate as budget cuts bite

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Click here to view full-size graphic

Paul Melia and Greg Harkin

One in three homeowners will be hit with increases in their local property tax (LPT) bills for next year.

Owners of modest homes valued at just €150,000 can expect to pay almost €50 more in 2017 after councillors across nine local authorities voted to increase the charges.

The hikes will fuel further disquiet about how the unpopular tax is implemented. Homeowners in Dublin pay the lowest rates in the country, but have access to a good public transport system and a wide range of public services.

Conversely, rural counties with poor access to services, who are often forced to drive due to the lack of buses or trains, pay more.

Some 1.83 million homeowners are obliged to pay the LPT, and an Irish Independent survey of local authorities shows that increases have been approved across almost a third of the country's 31 councils.

Read more Most first-time buyers won’t receive Budget grant

Local Government Minister Simon Coveney Photo: Tom Burke
Local Government Minister Simon Coveney Photo: Tom Burke

It will impact on 616,000 families who will have to pay more. No council has reduced the charge.

And for the first time since the LPT was introduced three years ago, three councils have decided to hike it above a Government-set standard rate. Galway County Council and Limerick City & County Council have voted through a rate 10pc above the standard. Wexford County Council has increased it by 5pc above the threshold.

The move is allowed under legislation whereby city and county councils can adjust the rate up or down by up to 15pc. It comes after local authorities struggled to fund essential services in recent years in light of repeated cuts in Government funding.

Capital spending has fallen off a cliff since 2007, while current spending on day-to-day services has also dropped. A report from the Comptroller and Auditor General notes that in 2007, local authorities were provided with just under €6bn in state funding. In 2015, that fell to just under €2bn.

The C&AG noted that central government funding to city and county councils presented a "highly complex" picture. The apparent lack of transparency on how valuable state money is spent in councils will be subject to hearings at the Public Accounts Committee.

Read more: Local authority votes against reducing Local Property Tax rates for 2017

It's noteworthy that fewer councils are reducing the rate, as budgetary pressures begin to bite. For 2016, 11 councils had a lower rate. Just five have one for 2017, while three are above the Government-set 'standard' rate.

The biggest rise is in Clare, where homeowners enjoyed a rate 15pc below the standard for 2016. For the owner of a modest home costing just €150,000, the increase will add almost €50 to their LPT bill from next January.

For those living in a house valued at €300,000, the LPT will increase from €497 to €585. All householders living in properties valued at less than €1m pay 0.18pc of the value of their homes in LPT. The property's value is calculated based on 2013 prices.

The rate is applied from October 1, but falls due from January 1 next year.

Other councils which hiked the rate to the standard include:

• Louth, where homeowners paid a rate 1.5pc below the standard.

• Cork County, where the rate was set at 5pc below.

Read more: Budget to neglect squeezed middle

• In Kildare and Monaghan, homeowners enjoyed a rate 7.5pc below the standard.

• In Cork City, it was 10pc below.

The new rates mean nine of the country's 31 local authorities are effectively increasing the hated household levy.

All four Dublin local authorities have maintained it at 15pc below the norm. Longford too has a lower rate.

Local Government Minister Simon Coveney had urged local authorities to increase the household tax to help fund local services.

In Wexford the increase will bring in an extra €600,000.

"The increased annual revenue will be ring-fenced to help fund the county council's new and highly ambitious €17m economic investment and job creation programme," said Wexford's communications officer David Minogue.

However other councils refused to implement year-on-year increases.

Read more: This national nonsense of tax cuts for all needs to end

People Before Profit councillor in Sligo, Declan Bree, said it had been 'intimated' that a rise by his council might have led to better relations with the department.

The debt-ridden council, which has been forced to implement a temporary closures of its libraries, voted to maintain the standard rate. "I can't describe it as pressure from Minister Coveney, but it had been intimated that our debts may be looked on more kindly if we did bring in a rise," he said.

The minister insisted he hadn't put pressure on any local authorities, but praised councils which did put up rates.

"We've seen Limerick make a decision to increase property tax and they are going to get an extra €1.6m in terms of money that they can spend on local services because of that," he said. "That is a precedent that we would like to see used in other parts of the country but it certainly isn't for me to tell councillors how to vote."

Irish Independent

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