Council denounces property tax for ‘not being truly local’

Bringing homes built since 2013 under the Local Property Tax (LPT) will raise more than €10m a year in the Dublin area alone, TDs have been told.

Almost 62,000 homes have been constructed since the LPT was introduced and including those currently exempted properties in the tax net will significantly aid the financial positions of local councils.

Dublin City Council members appeared before the Oireachtas Housing Committee yesterday and denounced the LPT for “not being a true local tax”.

Dublin City Council was forced to hand over almost €16m in LPT receipts to supplement weaker councils across the country last year, it emerged.

Dublin councillors are seeking to change rules that require the council to hand over millions raised in property tax to help fund services in rural areas.

At the committee hearing, Sinn Féin’s housing spokesman Eoin Ó Brioin said reforming the LPT is not sufficient; it needs to be scrapped.

He sympathised with Dublin councillors as the minute the property tax was introduced, the council saw its grant from central government reduced by the same amount.

“People were paying more but getting no added value,” he said.

A report compiled for the city council also argues that a revaluation of the LPT should be brought forward from November 2019.

It calls for an end to exemptions available to around 12,000 households, and suggests the capital city should get extra funding because of its place as the “employment centre in Ireland” and “first port of call for visitors”.

The study, compiled by Dr Pat McCloughan, managing director of PMCA Economic Consulting, suggests Dublin is unfairly subsidising other rural parts of the country.

It notes that almost €16m raised through the LPT in the city last year was paid back to the exchequer to be handed to councils with “weaker tax bases”.

The city council makes the case for keeping 100% of the money it takes in. “Householders in the Dublin City Council area understood they would benefit from more local services when the LPT was introduced but this has not happened because of how the LPT has operated to date,” states the report.

“The LPT, as it currently stands, is not a true local tax, even though most people agree with the principle of the LPT; the reality is that people are struggling to see its benefits, even with high compliance.”

Dr McCloughan says ‘equalisation’ should be replaced by a new arrangement in which local authorities with weaker tax bases receive supplementary funding from the exchequer.

The report describes Finance Minister Paschal Donohoe’s proposal to amend property tax rates in order to avoid a massive increase once a revaluation takes place as “understandable”.

The LPT is currently being calculated on the basis of 2013 market value, but house prices have spiralled in the interim. The report notes “escalation in residential property values being especially rapid in Dublin”.

Mr Donohoe has set up a working group to review the LPT ahead of a reassessment from November 1, 2019. But the report says this comes “after the point in the local authority budget cycle when they decide their LPT rates, which does not support sound budgetary planning among local authorities”.


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