Dáil Éireann Debate, Wednesday - 20 September 2017
762. Deputy Catherine Murphy asked the Minister for Housing, Planning and Local Government the data which was used in arriving at the baseline for the local property tax, LPT, in 2014; when the 2014 baseline was amended in 2017; the way in which the changes were calculated; the further calculation being considered; and if he will make a statement on the matter. [39320/17]
View answerThe local government funding model changed considerably in 2014, primarily due to the establishment of Irish Water. Its financial relationship with the local government sector had a considerable impact on local authority financing at that time. In allocating General Purpose Grants (GPG) from the Local Government Fund for 2014, my Department took account of the movement of certain water related activities from Local Authorities to Irish Water. In this context, it was necessary to defer defining a certain proportion of the proceeds of the Local Property Tax (LPT) to be retained in each local authority and the setting of LPT baselines until 2015.
As set out above, local retention of LPT began in 2015 and is now established as an essential source of funding for the local government sector, which reduces reliance on central funding. In accordance with decisions taken by Government regarding the distribution of LPT funding, every local authority has a minimum level of funding available to it known as the LPT baseline. The LPT funding baselines of all local authorities in 2015 and 2016 were at least matched to 2014 GPG funding from the Local Government Fund.
For 2017 onwards, an upward adjustment was made to the LPT baseline of each local authority, to include an additional amount equivalent to the Pension Related Deduction (PRD) income retained by local authorities in 2014. The inclusion of PRD in increased LPT funding baselines helps protect local authority income in the future. It means that, from 2017 onwards, local authorities will no longer retain PRD locally, thus reversing the previous approach. This was designed to negate the effects of declining PRD income being retained by local authorities from 2016 onwards as a consequence of the implementation of National pay agreements.
My Department works with all local authorities to ensure the local government sector can meet existing and emerging challenges. Matters relating to LPT allocation methods and baselines for future years will be reviewed as necessary and appropriate. All such funding issues have to be considered within the parameters of the national fiscal and budgetary situation and the competing priorities presenting themselves at wider Governmental level.
