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Local Authorities

Dáil Éireann Debate, Thursday - 21 October 2021

Thursday, 21 October 2021

Questions (206)

Éamon Ó Cuív

Question:

206. Deputy Éamon Ó Cuív asked the Minister for Housing, Local Government and Heritage the steps he intends to take immediately to introduce a redesigned revenue equalisation funding model for local authorities in view of the serious anomalies that have been widely identified in the present system that leaves counties such as Galway significantly underfunded; and if he will make a statement on the matter. [51971/21]

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Written answers

Local Property Tax (LPT) was introduced to provide a stable and sustainable funding base for the local authority sector, providing greater levels of connection between local revenue and associated expenditure decisions.  LPT broadens the tax base by reducing the level of central funding required by local government.

Local retention of LPT was introduced 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 currently re-distributed via the Local Government Fund 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. 

It is worth noting that local authorities may vary their LPT rate by up to 15%; authorities that increase the rate retain 100% of the additional income, while local authorities that decrease the rate bear the full reduction in income.  Neither Galway County Council nor Galway City Council has opted to avail of this opportunity for 2021 or 2022.

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.

The allocations for 2022 are based on the 2021 yield.  When detailed information on the new LPT yield becomes available following the revaluation process, the matter will be revisited.  Any changes to the allocation process and baselines may be considered in that context.

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