Owners to see property tax rise in 2020

Pascal Donohoe: Changes will be 'well understood'

Homeowners are likely to see increases to their local property tax (LPT) bills after next year, but Finance Minister Paschal Donohoe says they will be “affordable”.

He said any alteration to the tax levied on people will be “moderate and well understood”.

This represents the first indication that increases to how much homeowners pay in local property tax are likely following the introduction of a new system from 2020.

Dublin TDs have reacted with concern to any potential increase in LPT bills saying their constituents are already paying over the odds under the current system.

Fears of massive spikes in tax bills have been fuelled by continued increases in house prices in 2013, when the tax was introduced, and the property market is showing no signs of cooling, with prices advancing 13% year-on-year in February.

Prices in Dublin have risen by over 90% since the low point of the crash, and are 23% off their 2007 peak value.

Mr Donohoe, speaking this weekend, revealed that while changes are likely, they will be “well understood” before they are introduced.

“My view regarding the changes in property taxes is that changes in the future should be moderate and affordable,” he said. “And should be well understood.

“When I bring the local property tax review to conclusion later on in the year, we’ll be outlining how we will do it.”

Mr Donohoe said it was important to say the changes once decided upon “will be moderate, they’ll be affordable and they’ll be well understood by people in advance of that”.

When asked was he ruling out increases in how much people would pay, Mr Donohoe did not close the door but said that changes will be “affordable”.

“It’s too early for me to say that,” he said. “The work in relation to it is underway at the moment. The Budget Oversight Committee had produced a helpful report in relation to property tax. I’ll be considering that. Any changes that take place, I aim for them to be very moderate.”

The Budget Oversight Committee report found that proceeding with simple revaluations of local property tax in 2019 would have “harmful effects” and should not be considered.

It found that significant increase in LPT liabilities would arise if there is no change. It concluded that there should be a revaluation and adjustment to LPT rates nationally to maintain LPT yield or revalue and adjust rates locally to maintain yield.

Mr Donohoe is known to favour the second option and allow local authorities to have greater powers. It is also expected that 62,000 homes not currently subject to the LPT because they were built since 2013 are to be brought within the scope of the tax following the 2019 review.

“This would make the current system more equitable and also broaden the tax base,” the committee report stated. The LPT will raise €462m this year despite a large number of people who have deferred payment.

Mr Donohoe’s comments come despite Housing Minister Eoghan Murphy claims in January that he is planning to amend the rules governing property tax rates to avoid increases in bills from next year.

The structure of the property tax has been the source of criticism from Dublin TDs, who feel it is “grossly unfair”. Property tax bills are four times higher in parts of Dublin than in more rural parts of the country.


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