Noel Bourke, the general secretary of the Local Authority Members Association, urged Phil Hogan last night to examine the issue as a matter of urgency and devise a “sensible solution” to the problem facing councils as they finalise their budgets for next year.
“Our fear is that the thousands of council tenants around the county could end up paying this bill for the various councils.
“We need to arrive at a sensible solution — one that doesn’t involve the cost being passed on to tenants.”
His comments came after the Irish Examiner revealed yesterday that tenants of Cork City Council could be facing rent hikes of up to €100 a year to help the council pay a €1.2m local property tax bill.
Under the local property tax (LPT) legislation, local authorities must pay the tax on their properties in the same way as other residential property owners, unless the properties are used to accommodate people with special housing needs.
“It will be a matter for the local authority to decide whether it will pass on the LPT liability to its tenants in the form of an increase in rent or whether it will absorb the liability without recourse to its tenants,” the Revenue said.
At a behind closed doors meeting on Tuesday, Cork’s city manager Tim Lucey told councillors the council faces a €€400,000 local property tax bill on its housing stock for this year, and an €€800,000 bill next year.
Coupled with reduced funding, and with income streams under pressure, the city is facing a potential shortfall of at least €4m in the run up to December’s budget, his figures showed.
City councillors expressed concerns that the cost of the LPT will be passed on to tenants.
Mr Bourke said people in local authority housing just cannot afford to take this hit. “I would have thought that some arrangement or assistance could have been devised to help councils in this situation. The Government is asking councils to pay this tax only to pay it back to the same councils to deliver local services. It’s a complete waste of time and resources.”
Cllr Mick Finn, who has branded the situation “Benny Hill economics” by central government — allocating taxpayers’ money on the one hand and taking it back in the other — called for clarity on the level of central government funding which will be allocated to the city next year.
“We’re flying in the dark and do not know if there will be a fourth successive cut in the Local Government Fund or whether we’ll remain at 2013 levels.”
Cllr Tom Gould said it was “shaping up to be the most severe budget in the history of the council”.
The budget will be voted on on Dec 16.