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Tuesday 22 May 2018

Capital 'should be allowed to keep property tax funds'

Dublin city centre (Stock picture)
Dublin city centre (Stock picture)
Kevin Doyle

Kevin Doyle

Dublin City Council is to fight back against rules that require it to hand over millions raised in property tax to help fund services in rural areas.

The country's largest local authority has said the charge is "not a true local tax" because the capital was forced to give up almost €16m last year.

A report compiled for the City Council, seen by the Irish Independent, also argues a revaluation of the Local Property Tax (LPT) should be brought forward from November 2019.

It calls for an end to exemptions available to around 12,000 households, and suggests the capital should get extra funding because of its place as the "employment centre in Ireland" and "first port of call for visitors".

In particular the study, compiled by Dr Pat McCloughan, managing director of PMCA Economic Consulting, suggests Dublin is unfairly subsidising other rural parts of the country. It notes that almost €16m raised through LPT in the city last year was paid back to the Exchequer to be handed to councils with "weaker tax bases".

The City Council makes the case for keeping 100pc of the money it takes in. "Householders in the Dublin City Council area understood they would benefit from more local services when the LPT was introduced but this has not happened because of how the LPT has operated to date," the report states.

"The LPT, as it currently stands, is not a true local tax, even though most people agree with the principle of the LPT; the reality is that people are struggling to see its benefits, even with high compliance."

Dr McCloughan says 'equalisation' should be replaced by a new arrangement in which local authorities with weaker tax bases receive supplementary funding from the Exchequer.

The report adds that from the next revaluation, local authorities should be required to provide householders in their respective areas with information on how they spend the LPT funds available to them.

The 27-page report describes Finance Minister Paschal Donohoe's proposal to amend property tax rates in order to avoid a massive increase once a revaluation takes place as "understandable". The LPT is currently being calculated on the basis of 2013 market value, but house prices have spiralled in the interim. The report notes that "escalation in residential property values being especially rapid in Dublin".

Mr Donohoe has set up a working group to review LPT ahead of a reassessment from November 1, 2019. But the report says this comes "after the point in the local authority budget cycle when they decide their LPT rates, which does not support sound budgetary planning among local authorities". It adds it would "makes sense" to bring this date forward.

The report will be debated at the Oireachtas Housing Committee today.

Irish Independent

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