Thursday, 24 June 2021

Questions (218, 219)

Mick Barry

Question:

218. Deputy Mick Barry asked the Minister for Housing, Local Government and Heritage if he will report on the impact for local authorities of the changes to the local property tax; and if he will make a statement on the matter. [31777/21]

View answer

Richard Boyd Barrett

Question:

219. Deputy Richard Boyd Barrett asked the Minister for Housing, Local Government and Heritage the supports that will still be given to the councils that were previously in receipt of moneys from the equalisation fund; and if he will make a statement on the matter. [31407/21]

View answer

Written answers (Question to Housing)

I propose to take Questions Nos. 218 and 219 together.

The Government remains committed to ensuring that the local government sector retains a sustainable and stable source of funding from Local Property Tax (LPT), distributed to local authorities via the Local Government Fund, to support the delivery of local authority services.

Local retention of LPT began in 2015 and since then the overall principles and allocation methodology have broadly remained the same. 80% of LPT is retained in the area it is collected, with the other 20% supporting equalisation for local authorities with LPT bases lower than their funding baseline.

The Programme for Government 'Our Shared Future', commits to bringing forward LPT reforms. These reforms will involve bringing new homes, which are currently exempt from LPT, into the taxation system as well as providing for all money collected locally to be retained within the county. This will also be done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer, as is currently the case.

My colleague, the Minister for Finance, recently published the Heads of the Finance (Local Property Tax) (Amendment) Bill 2021. The Bill will give effect to a package of measures in line with the Programme for Government to address the future of the LPT. Minister Donohue also signalled the Government’s intent to move to 100% local retention from 2023. Any changes to the allocation process may be considered in that context.

As the LPT revaluation process is likely to take a number of months, detailed information on the new yield per local authority will not be available until later in the year. Accordingly, LPT allocations for 2022 will provisionally be based on updated information regarding the 2021 yield, on a no change basis i.e. the 80:20 model. All other elements are also be based on 2021 figures, including the LPT baselines, the equalisation contribution and self-funding of housing and roads from surplus LPT. It is recognised that the yield will change following the revaluation and the matter will be revisited at that point.

My Department last week confirmed provisional LPT allocations to local authorities for 2022 amounting to €528m. These allocations include the Exchequer contribution to equalisation funding of €34.3m. There will be no change to allocations for the 20 local authorities requiring equalisation funding, as their LPT yield is below their funding baseline. When detailed information on the new LPT yield becomes available, my Department will progress work on the planned move to 100% local retention of LPT and the effects on the funding system for local authorities.

As previously, every local authority has the power to vary the basic rate of LPT in their local area by up to 15%; those variation decisions have not yet been made and are not reflected in these allocations. The proposed LPT Amendment Bill referred to above will bring forward the deadline for notifying Revenue of the Local Adjustment Factor (LAF) to 31 August in a revaluation year, such as this year. While I appreciate this timeframe is extremely challenging for local authorities, there is little option. The regulations have already been amended to assist local authorities to meet the earlier deadline.

My Department works closely with the local government sector on a range of financial issues, to ensure that any additional resources that may be available are appropriately targeted. The funding for all local authorities will be kept under review as part of the normal Estimates process and in the context of the aforementioned LPT revaluation process.

Question No. 219 answered with Question No. 218.