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Local Authorities

Dáil Éireann Debate, Tuesday - 27 July 2021

Tuesday, 27 July 2021

Questions (668)

Mattie McGrath

Question:

668. Deputy Mattie McGrath asked the Minister for Housing, Local Government and Heritage if the procedure which was put in place in 2014 whereby counties that required additional funding from the equalisation fund could apply to bring counties back to their previous funding levels before 2014 is still available; the procedure which Tipperary County Council can use to apply for this funding; the basis used to calculate previous funding levels; the amount applied in each year since the equalisation fund was set up; the amount granted in each year since 2014; if there has been a shortfall on the amount requested in each year since 2014; if so, the explanation for the shortfall; and if he will make a statement on the matter. [40012/21]

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Written answers

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.

The current LPT local retention policy 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, due to the variance in property values and density across the country. Funding for equalisation purposes is provided via the Local Government Fund.

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. There are variances across the country in terms of LPT levels but it is important that all local authorities in the State receive at least this minimum funding level to ensure they can deliver services. The LPT funding baseline is linked to previous General Purpose Grant amounts and Pension Related Deductions retained by authorities in 2014. Exchequer funding is also required to ensure every local authority receives at least its baseline funding. Two-thirds of authorities receive equalisation funding support to bring their funding levels up to their baselines. Tipperary County Council’s LPT baseline of €29.95m is the highest of any local authority. As 80% of the projected LPT yield is lower than its baseline, the authority is a recipient of €16.29m in equalisation support, which is again, the highest level of support of any local authority.

Detailed information on the LPT retention system, including equalisation funding and allocations is published by my Department on an annual basis and is available at the following link: www.gov.ie/en/collection/ea27d-local-property-tax-allocations/

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 Department recently confirmed provisional LPT allocations to local authorities for 2022 amounting to €528m. The €34.3m shortfall between the 20% contribution from all local authorities and the total amount required for equalisation is met by the Exchequer. 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 following the revaluation process, 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.

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.

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