Changes to Property Tax 'deferred' for another year
Changes to the Local Property Tax (LPT) that were due to be made this November have been deferred until 2021.
Homeowners won't see any change in their LTP bills until 2021 under the proposal brought to Cabinet by finance minister Paschal Donohoe.
That’s beyond the next general election which is expected by summer 2020 at the latest.
The Department's Review Group presented five alternative methods of calculation to the current regime.
It recommended that a target annual yield should be identified to provide a consistent means of evaluating the suggested scenarios for a broad range of taxpayers.
For the purpose of the review, the Review Group targeted a broad yield of €500m, a modest increase on the 2018 yield of €482m.
As all of the scenarios involve different “winners” who would see an LPT reduction and “losers” who would see hikes in each option the Review Group considered therefore that it must be a matter for Government as to which, if any, of the options provides for "moderate and affordable adjustments".
Property tax rates have remained the same since 2013.
In 2016, the government took a decision to keep them at their current level until November 2019.
However, a statement tonight says that “Minister Donohoe believes it necessary to engage in further consultation to identify a scenario that would deliver on the condition set by the Minister that there should be relative stability for all taxpayers in their LPT bills and that any increases should be modest and affordable.”
It added: “The Minister is also conscious of the importance of maintaining simplicity in the operation of the LPT which was a major success factor in its successful introduction.”
“Minister Donohoe has therefore decided to defer the valuation date from 1st November 2019 to 1st November 2020. With this new valuation date, there will be no change in LPT bills by central Government until 2021.”
The review will be sent to the Budgetary Oversight Committee for its consideration.
Mr Donohoe said: “I have indicated consistently that it was my aim to try to ensure stability in the LPT bills of all taxpayers. Increases for taxpayers in LPT, if any, should be modest, affordable and fair.
“I have decided in the circumstances to defer the revaluation until November 2020 and, in line with the committee’s request, I am referring the review report to the Budgetary Oversight Committee for its consideration’.
He also said: “It is my expectation that the reformed LPT will be based on a model of band widening combined with LPT rate changes.
“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).”
When news of the delay in changing the LPT system first emerged earlier today, Fianna Fáil’s finance spokesman Michael McGrath argued it’s “a classic example” of “kicking the can down the road.”
He claimed it was “about the electoral cycle” and is a sign of “weak government.”
There have been fears that the tax will increase significantly due to rising house prices if the way LPT is calculated is not changed.
The Department of Finance conducted a review of the LPT and if the recommendation to defer the changes is adopted, the LPT would not change until 2021.
The government have promised to find a way to ensure most households don't see a major increase to LPT
Last month Taoiseach moved to reassure people that there won't be large hikes in the tax.
He said: "There are different mechanisms and different options that we can use to make sure that the vast majority of people pay the same amount of property tax."
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