Local Property Tax (LPT) was introduced to provide an alternative, stable and sustainable funding base for the local authority sector, providing greater levels of connection between local revenue raising and associated expenditure decisions and making the taxation system less dependent on other taxes.
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.
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.
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. The 19 local authorities that voted to increase their LPT above the basic rate are expected to increase LPT income by €19.7m, for their own use in 2020. The equivalent increase in LPT income over the basic rate for the same authorities in 2019 was €3.4m.
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. The full Report is available at the following link: