A hike in Cork city’s 2021 local property tax (LPT) rate is on the cards, which will see private home owners pay more tax and land local authority tenants with higher rent.
Councillors meet on Friday night to consider the local adjustment factor on the basic rate of the annual self-assessed tax charged on the market value of residential properties within the city. They can adjust the rate by a maximum of plus or minus 15%.
Against the backdrop of an estimated €4m gap in the council’s finances linked to the impact of Covid-19, council chief executive Ann Doherty has requested that councillors increase the local adjustment factor by the maximum 15% in an effort to generate just over €3.1m to help maintain services.
“If an increase of +15% is not passed, Cork City Council will have a funding shortfall in the region of €3m, which will have a significant impact on the delivery of services for 2021,” she said.
Without the increase, the city will have to reduce its discretionary non-pay spend by around 17%, leading to significant reductions in services for 2021, she said.
Property owners whose premises are valued in the various bands between €250,001 and €600,000 paid varying rates of LPT last year, ranging from €495 to €1,035.
A 15% hike in the local adjustment factor would see their rates rise by varying degrees between €74 and €155 next year.
People whose homes are valued at €1m, and who were liable for €1,755 in LPT last year, would see an increase of €263.
Talks between the various political parties were ongoing last night ahead of tonight’s vote.
In a report for councillors, Ms Doherty said the preparation of the city’s 2021 budget is proving to be extremely challenging in the current Covid-19 climate which she said is posing “unprecedented financial, environmental and social challenges” for the council.
She said some of the city’s income sources, including rates and parking, have been greatly reduced, causing a knock-on effect on the council’s ability to provide services.
“In May, the council had to introduce a mini budget and adjustments had to be made to its spending budgets across all directorates and areas under its remit,” she said.
“The council also had to incur additional costs to meet measures arising from Covid-19 – social distancing, new safety requirements etc.
“All of these costs will have to be funded from our existing budgets as no funding is being provided by central government for this.”
She said the situation remains uncertain with the possibility of second lockdown looming and this level of uncertainty continuing into 2021.
The rate of compensation for the government’s waiver of rates income for six-months is still being calculated but local authorities don’t know if there will be any compensation for the remainder of the year, or what the position will be next year.
Since 2017, councillors have voted annually for a 0% local adjustment factor, which has generated an additional income of €777,000 per year - €3.108m over four years.