The Local Property Tax (LPT) accounts for approximately 9% of the local government sector’s current income, amounting to allocations of €503m in 2019. It supplements income from commercial rates, from the provision of goods and services and from government grants. Local authorities’ cost and income bases vary significantly from one another, as do their LPT bases, and their abilities to raise revenue from other sources.
In 2019, 80% or €393.8m of the overall LPT allocation is being used at the discretion of local authorities to support the provision of local services which benefit citizens directly such as parks, libraries, leisure amenities, fire and emergency services, street lighting, maintenance and cleaning of streets. In addition, 20% or €109.3m of LPT is supporting Housing and Roads services in 2019, supplementing the considerable exchequer funding also provided for these important services. Apart from these specific self-funding allocations, it is a matter for each local authority to determine its own spending priorities including how to spend its LPT allocation.
In 2020, I expect that LPT allocations will increase to €516.8m. The increase is accounted for, in the most part, by the decisions of 19 local authorities to increase their LPT rates above the basic rate for 2020. When a local authority decides to vary the LPT basic rate upwards (by up to 15%), it retains 100% of the resultant additional income collected in the local authority area. Likewise, when the rate is reduced, the authority forgoes the income that would have been collected. The 19 local authorities that voted to increase their LPT above the basic rate are expected to gain €19.7m in additional LPT income for their own use in 2020. The equivalent LPT gain over the basic rate for the same authorities in 2019 was €3.4m.
LPT allocations to local authorities for 2020 and previous years are published on my Department’s website at the following links: https://www.housing.gov.ie/search/archived/current/category/housing/sub-topic/local-property-tax/sub-type/funding-allocation/topic/chargestaxes/type/publications?query and https://www.housing.gov.ie/sites/default/files/publications/files/final_2020_lpt_allocations_after_local_variation.pdf.
Taxation policy, including in respect of LPT, is in the first instance a matter for my colleague the Minister for Finance and Public Expenditure and Reform. In this regard, a ‘Review of Local Property Tax’ was published by the Department of Finance in March of this year and referred by Minister Donohoe to the Budgetary Oversight Committee for its consideration. Chapter 2 and Appendix B of the LPT Review provide a more detailed outline of LPT as a funding source for local authorities: