Thursday, 4 July 2019

Questions (451)

Michael McGrath

Question:

451. Deputy Michael McGrath asked the Minister for Housing, Planning and Local Government his views on the recommendation from the Local Property Tax Review Group to remove the equalisation contribution from the LPT system; the possible alternative mechanisms by which local authorities can maintain funding levels; and if he will make a statement on the matter. [29029/19]

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Written answers (Question to Housing)

The Government remains committed to ensuring that the local government sector retains a sustainable and stable source of funding from LPT to enable the delivery of essential services, particularly in a time of increasing demands on local authorities. Taxation policy, including local property tax policy, is in the first instance, a matter for my colleague, the Minister for Finance and Public Expenditure and Reform.

The current system of local retention of Local Property Tax (LPT) began in 2015 and since then 80% of the estimated LPT liability in each local authority area for a given year is retained in that area to fund public services, notwithstanding any local variation decisions. The remaining 20% of LPT is re-distributed to provide equalisation funding to those local authorities that have lower property tax bases.

The report on the Review of Local Property Tax recommended that the equalisation contribution from local authorities (equivalent to 20% of their LPT yield) be discontinued and that all local authorities retain 100% of LPT collected in the local authority area. In such a scenario, to ensure stability, sufficient funding would be required to ensure that local authorities with weaker property tax bases would continue to be supported. Any such change would require careful consideration in the context of the budgetary and estimates process.

In light of decisions taken by Government subsequent to the completion of the report on the Review of Local Property Tax, the Minister for Finance and Public Expenditure and Reform referred the Report to the Committee on Budgetary Oversight for further consideration. The deferral of revaluation until November 2020 provides time and space for the Committee to consider the report and to provide its views to the Minister for Finance and Public Expenditure and Reform.