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Property tax cut on cards as Dubs fund rural towns

DUBLIN homeowners are on course to get significantly reduced property tax bills next year under new plans due to be published by the Environment Minister today.

Government officials have determined that the proceeds generated by the property tax across all four local authorities in Dublin is larger than expected.

This means that councillors will this month be in a position to vote for a full 15pc reduction in property tax rates for Dublin families.

However, the Government plan will prove controversial because it will result in Dublin property owners subsidising rural local authorities.

A government working group determined that while the property tax proceeds in Dublin were above estimates, councils in rural areas will be left short of cash.


As part of the legislation underpinning the property tax, 20pc of the proceeds are due to go to a central government fund, while 80pc are designed to remain in place to pay for services locally.

But in a bid to ensure that rural councils avoid greater financial difficulty, millions of euro generated in Dublin will be channelled to places such as Leitrim, Sligo, Donegal, Kerry and Tipperary.

The Government is preparing to slash some other funding channels to Dublin councils in order to ensure rural councils stay afloat.

Senior government sources said that while families in the capital will be paying for services in rural Ireland, some of the Dublin councils will still be better off as a result of the huge property tax windfalls.

"This falls into the concept of equalisation," said a Labour source today. "We have to adopt this system to ensure the Leitrims and Longfords can afford their services."

A government spokesman said that the legal power given to councils to raise or reduce the level of property tax by up to 15pc will not change, but the ability of councils to reduce the rate of tax remains in doubt.

Labour's Environment Minister Alan Kelly and his department are currently working through the financial, legal and administrative implications for councils across the country.

Dublin City Council expects to collect €80m from the tax in 2014, while Fingal collected €32m last year.

Ninety-seven per cent of homeowners in Dun Laoghaire-Rathdown paid the property tax, making it the council with the highest rate in the State. Bills in the area averaged at €686, with a total of €58.1m collected.


A number of local authorities, including Dun Laoghaire-Rathdown, Fingal and Cork County Council, have already voted to slash the property tax by 15pc.

Representatives from Dublin City Council and several other local authorities have given strong indications that they would follow suit - despite warnings from council management.

Mr Kelly's plan will mean a number of councils will have accept a lower cut to property tax. Otherwise, the local authorities impacted by the measures would be forced to make cuts to other community services.

The news is sure to cause uproar among Dublin TDs, some of whom warned against Dublin being "discriminated against".