80% of homes will see increase in property tax from 2021

80% of homes will see increase in property tax from 2021

Four out of every five homes will pay up to €200 more in Local Property Tax once the new charging regime comes into force in 2021.

Plans being considered by Finance Minister Paschal Donohoe will see most homes pay more in LPT, but Mr Donohoe insists the increases will be modest and affordable.

Fianna Fáil's finance spokesman, Michael McGrath, said it is clear that some 80% of properties in that scenario will see an increase from just above zero to over €200.

He said the rate for that local authority can be adjusted based on those revised valuations to ensure that the yield for the local authority remains pretty much consistent with what it was.

In response, Mr Donohoe said that "as we bring existing households into the LPT net the revenue these properties will contribute initially will be a relatively small part of the new LPT yield".

"In respect of why there is such a variation, there are two reasons. The first is that there has been such geographical variation by county.

"We have seen very different rates of price changes by county across the country. Even within counties, we have seen very uneven rates of price increases. This is the key point.

"The uneven degree of price inflation by county and within counties has made it very difficult to come up with a model in which we can ensure there is nobody who does not face a change," he said.

Paschal Donohoe
Paschal Donohoe

Mr Donohoe has made clear that he wants to see more of the LPT remaining in the local area in which it was collected: "We need to look at how to strengthen the link between the local property tax somebody pays and the local services he or she receives.

"I would like to find a way to ensure that more of the tax raised within a particular area stays within that area.

"The flip side of that is the need to ensure other local authorities do not lose out as a result.

"We have to ensure that a local authority that currently receives funds from elsewhere is not penalised as a result of that policy decision.

"In parallel with bringing in the legislation, we must make progress in dealing with that."

Because property prices have grown at different levels in different parts of the country, any reform will have distributional consequences, Mr Donohoe said.

"Some people will benefit and others will not. My overall point is that made by Deputies Chambers and Breathnach.

"As part of changing this, I would like to build the link between what property owners pay and what is retained and spent in their areas.

"We can do that. We will have to do it for some local authorities in order to ensure a successful revaluation," he said.

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