Thursday 22 February 2018

Varadkar’s property tax cut for Dublin homeowners

Plan will benefit the capital as State pays for rural shortfall

Fine Gael leadership front-runner Leo Varadkar. Photo: Colin O'Riordan
Fine Gael leadership front-runner Leo Varadkar. Photo: Colin O'Riordan

Kevin Doyle and Paul Melia

Homeowners in Dublin and the commuter belt are set for lower property tax bills.

Fine Gael leadership front-runner Leo Varadkar wants to change how the property tax is collected and distributed, which would significantly benefit homeowners in Dublin and the commuter belt.

The Social Protection Minister said councils should be allowed vary the tax rate by more than the 15pc currently allowed. The move would either cut bills or protect homeowners from large tax hikes when homes are revalued in 2019.

Speaking to the Irish Independent, Mr Varadkar said he also plans to allow councils to keep the property tax collected in their area.

The restructuring of the Local Property Tax (LPT) would represent a change from the current situation where all councils must set aside 20pc of their take for redistribution to those with a smaller tax base.

Instead, poorer councils would be topped up from central government funding, costing around €140m a year.

Cork FG member Peig Murphy votes in the leadership contest. Photo: Daragh Mc Sweeney/Provision
Cork FG member Peig Murphy votes in the leadership contest. Photo: Daragh Mc Sweeney/Provision

Figures from the Department of Housing show 10 local authorities would benefit from the move - the four councils in Dublin, and those in Kildare, Wicklow, Meath, Clare, Galway city and Cork county.

The revaluation of properties will result in people living in areas with rising property prices being hit with higher bills. Allowing councils to vary the rate would protect homeowners, Mr Varadkar said.

Read more - The final scorecard: How Varadkar took on Coveney in his own backyard... and won

"People want to see their LPT spent in their locality, in their communities and their county," he told the Irish Independent. "There is going be a revaluation of property tax. House prices have gone up very considerably in the last number of years - up to 50pc in a lot of cases - so it allows us to take a proper look at it.

"There are two things I think you could do in that context. First of all, reinforce the principle that local property taxes should stay in the locality and give local authorities much more authority to vary the tax. Real local government means real decision making."

Mr Varadkar said if councils had more autonomy to vary the rate, they could protect homeowners whose properties had rapidly risen in value since the LPT was introduced in 2013. Councils could also decide to retain the additional money collected to fund local services.

The amount to be collected under the LPT is based on the so-called general purpose grant provided by central government in 2014, plus the proceeds of the pension levy. The tax is based on 0.18pc of the value of the home, €1m-plus properties pay more. Each council is allowed to retain 80pc of what it collects, and 20pc is earmarked for a so-called Equalisation Fund.

This is distributed to councils which do not have a property tax base sufficient to cover the cost of funding services. This year, it is worth €140.3m to 21 of the country's 31 local authorities. Cities including Cork, Waterford and Limerick rely on it.

Mr Varadkar's proposals will be welcomed by many living in the capital and commuter belt, which are hit with high LPT bills. This is because the tax is levied on the market value of the property, meaning that homeowners living in areas with expensive properties are hardest hit - even if their homes are smaller than those in rural areas which incur a lower bill.

The report sets out the average asking price for properties across the State.

In Castleknock, Dublin 15 - Mr Varadkar's constituency - the LPT bill on a three-bed semi-detached home valued at €399,000 is €675 per year. A three-bed semi-D in Kildare would incur a bill of €315, falling to €90 in Longford, where property prices are low.

Mr Varadkar insists rural counties would not lose out.

"Any equalisation should be done from general taxation. There are different ways that local authorities are funded, they don't just get it from the property tax. There is commercial rates and money from all sorts of different government grants. There's no reason why you couldn't deal with the issue of equalisation in that way. The general principle that I believe in is that there should be more local autonomy for local government," he said.

Ten councils to win big under Leo's tax plan

Ten local authorities, most in the Greater Dublin Area, will have an additional €170m a year to spend under Fine Gael leadership frontrunner Leo Varadkar's plan to allow councils retain property tax receipts.

This is because they collect more under the property tax than they received prior to its introduction in 2013 from central government.

Dublin City has a surplus of €44.4m, and could keep this for local services under the plan. Dún-Laoghaire Rathdown would retain €33m, followed by Fingal (€26.7m), Cork County (€24m), South Dublin (€21.2m), Kildare (€5.4m), Wicklow (€5m), Galway City (€3.8m), Clare (€3.5m) and Meath (€3.4m).

The Government will have to make up the shortfall to the other 21 councils that have a shortfall.

Donegal and Tipperary county councils received some €16.5m each this year from the Equalisation Fund, while Mayo received €11m. Limerick, Waterford and Cork cities all rely on the Equalisation Fund to fund services.

In percentage terms, more than 80pc of Longford and Leitrim's property tax allocation is drawn from the Equalisation Fund, followed by Monaghan (73pc) and Roscommon (69pc).

Fine Gael parliamentary party endorsements for leader

The Fine Gael parliamentary party makes up 65pc of the total electorate.

That makes each of the 73 members' votes worth 0.9pc of the total ballot.

Of the remaining electorate, 230 party councillors account for 10pc, while the remaining 25pc is rank and file members.

Leo Varadkar
Simon Coveney

Total: 45

Total: 19

Ministers: 17

Ministers: 5

TDs: 16

TDs: 5

Senators: 11

Senators: 8

MEPs: 1

MEPs: 1

Richard Bruton -MinisterSimon Harris - Minister
Frances Fitzgerald - MinisterDamien English - Minister
Michael Ring - MinisterDara Murphy - Minister
Eoghan Murphy - MinisterDavid Stanton - Minister
Sean Kyne - MinisterMarcella Corcoran Kennedy - Minister
Joe McHugh - MinisterKate O'Connell - TD
Helen McEntee - MinisterMaria Bailey - TD
Charlie Flanagan - MinisterSean Barrett TD
Paul Kehoe -MinisterHildegard Naughton - TD
Patrick O'Donovan - MinisterPeter Fitzpatrick - TD
Regina Doherty - MinisterTim Lombard - Senator
Mary Mitchell O'Connor - MinisterJerry Buttimer - Senator
Paschal Donohoe - MinisterPaudie Coffey - Senator
Heather Humphreys - MinisterJames Reilly - Senator
Pat Breen - MinisterColm Burke - Senator
Catherine Byrne - MinisterJohn O'Mahony - Senator
Andrew Doyle - MinisterPaul Coghlan - Senator
John Paul Phelan - TDGabrielle McFadden - Senator
Noel Rock - TDDeirdre Clune - MEP
Tony McLoughlin - TD 
Alan Farrell - TD 
Michael D'Arcy - TD 
Tom Neville - TD 
Josepha Madigan - TD 
Pat Deering - TD 
Jim Daly - TD 
Brendan Griffin - TD 
Ciaran Cannon - TD 
Colm Brophy - TD 
Peter Burke - TD 
Fergus O'Dowd - TD 
John Deasy - TD 
Joe Carey - TD 
Neale Richmond - Senator 
Catherine Noone - Senator 
Paddy Burke - Senator 
Martin Conway - Senator 
Michelle Mulherin - Senator 
Maura Hopkins - Senator 
Ray Butler - Senator 
Frank Feighan - Senator 
Maria Byrne - Senator 
Joe O'Reilly - Senator 
Kieran O'Donnell - Senator 
Brian Hayes - MEP 
Enda Kenny - Outgoing Party Leader *Martin Heydon - Party Chairman *
Michael Noonan - MinisterMichael Creed - Minister
Bernard Durkan - TDSean Kelly - MEP
Mairead McGuinness MEP  

* Outgoing leader Enda Kenny and party chairman Martin Heydon will not make an endorsement

Irish Independent

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