Wednesday 21 August 2019

Local councillors should be stripped of powers to cut property taxes - report

Finance Minister Paschal Donohoe. Photo: Gareth Chaney, Collins
Finance Minister Paschal Donohoe. Photo: Gareth Chaney, Collins

Kevin Doyle and Cormac McQuinn

Local councillors will lose the ability to reduce the Local Property Tax (LPT) in their area under recommendations in a Government report.

The review of the LPT, commissioned by Finance Minister Paschal Donohoe, recommends that Government sets a standard rate which can only be adjusted upwards by local authorities.

Currently each council has the option of increasing or reducing the tax by a maximum of 15pc.

The four local authorities in Dublin, where property prices are highest, have dropped their rates for 2019 at a total cost of €28.4m.

Since 2015, 15 different local authorities have used the existing system to lessen the burden on their homeowners.

However, the review published this week says the 'Local Adjustment Factor' should be amended "to permit upward only adjustments to a maximum of 15pc".

The recommendation contradicts a promise from Taoiseach Leo Varadkar to "enhance" the discretion given to councillors.

He has argued that local authorities should be given more autonomy.

North Dublin Fine Gael councillor Tom O'Leary said the Government should retain councillors' power to reduce LPT. "We seem to have less and less powers and this is one we should keep," he said.

Mr O'Leary raised concern that some households will face increases no matter what changes are made.

"The flexibility should be retained on a case-by-case basis depending on the needs of different areas," he said.

He also said "most councillors are sensible people" and pointed out that Fingal County Council, while using its power to reduce the LPT this year, did so by 10pc, not the full 15pc currently permitted.

Although the report seeks to restrict councillors' ability to set rates locally, the report does advise the Government to allow money to stay in the area where it is collected.

Currently, local authorities pay 20pc of their LPT income into an equalisation fund so that those with lower incomes can get top-ups.

But the Review Group says that 100pc should be retained locally.

"While this will help strengthen transparency and accountability, it is acknowledged that it may result in an additional cost to the Exchequer in the absence of other charges," the report states.

Mr Donohoe has decided not to implement any of the report's recommendations this year.

Despite the report’s recommendations, Mr Donohoe said: "I support retention of the option for Local Authorities to reduce the LPT rate for their area by use of a downward Local Adjustment Factor (LAF)."

Instead he wants it to be considered by the Oireachtas' Budget Oversight Committee in the hope of reaching a cross-party consensus.

Homeowners currently pay the LPT based on the value of their property in 2013, but prices nationally have risen by around 80pc.

The re-evaluation was due to take place in November, but it has now been postponed until 2020.

Irish Independent

Editor's Choice

Also in Irish News