Outgoing Labour leader Eamon Gilmore has ramped up the row about whether city and county councils will be able to reduce the levels of property tax on homeowners.
Mr Gilmore, on his final day as Tánaiste, declared that any going back on promises that the tax could be reduced was a “fundamental breach” of a previous deal agreed with Fine Gael.
Taoiseach Enda Kenny said yesterday that nothing was yet decided but that councils could not end up worse off than last year.
The row revolves around the ability by local authorities to reduce or increase the tax by up to 15% in January next year, an option agreed by the parties and enacted this year in legislation.
Mr Kenny promised at his party’s Árd Fheis in April that Fine Gael councillors would oppose any hikes in the tax while the election manifesto promised to reduce it.
It is believed a document circulated to some Cabinet members advises on which councils will not have a surplus of funds in order to pass on a cut in the tax to local residents.
It advises that up to 11 counties and cities, while in a position to reduce the charge, would be hit financially if the Government then proceeded to reduce their grants.
People living in Dublin city, south county Dublin, Kildare, Wicklow, Louth, Meath, Galway city, Kerry, Clare and Cork city and county will lose out, it has been speculated.
Fine Gael are believed to want councils who get a windfall from the tax to give over the extra money to central exchequer funds. Labour though are keen to give struggling homeowners a break.
Mr Gilmore pointed out it had been agreed by the Coalition that 80% of the proceeds collected from the tax would go towards delivery of services in each local authority area.
He said he was very concerned about reports about plans to claw back the proceeds of the tax from local areas, adding: “It would be a fundamental breach of the way in which the property tax was designed. It would be a fundamental breach of the political understanding that was reached at the time the property tax was agreed and it would be something I would be very strongly opposed to.”
But his Cabinet colleague Pat Rabbitte, during Leaders Questions in the Dáil, said that the Government had not changed its position on the tax. There was “no squabble” between the parties about it, he insisted.
Speaking in Berlin, Enda Kenny said councils had to publish their budgets so people know what they are getting for the taxes they pay.
He added: “The only things that have been agreed is that 80% of the property tax should be retained in council area and no council should be worse off than last year.”
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