Dáil Éireann Debate, Thursday - 1 October 2020
165. Deputy Claire Kerrane asked the Minister for Housing, Local Government and Heritage further to Parliamentary Question No. 1185 of 5 March 2020, the details of the way in which those differences apply in determining the funding allocation precisely when it comes to the various factors considered and local authority funding amounts as referred to; and if he will make a statement on the matter. [27966/20]
Amharc ar fhreagraLocal authorities’ cost and income bases vary significantly from one another as a result of their size, population, public service demands, infrastructure and income sources. There are significant variances in their abilities to raise revenue locally and they therefore require differing levels of financial support. Until the introduction of local retention of Local Property Tax (LPT) in 2015, this support took the form of General Purpose Grants (GPGs). When allocating GPGs, regard was had to each local authority’s income and expenditure, the overall amount of funding available for allocation and the need to provide each local authority with a baseline allocation that would ensure its financial stability.
2014 was the final year of GPG allocations. The 2014 GPG allocations also recognised the move of water related costs from local authorities to Irish Water in 2014. Accordingly, 2014 GPG allocations are not directly comparable to previous years.
Local retention of LPT began in 2015, when LPT allocations replaced GPGs. At that time, the Government decided that no local authority would receive less income from LPT in 2015 and 2016 than it received from its GPG allocation in 2014. Accordingly, the LPT allocations for 2015 and 2016 took account of the historical GPG funding provided to any former borough or town councils within the local authority area. For 2017 onwards, the LPT baseline of each local authority was increased to include an additional amount equivalent to the Pension Related Deduction income retained by local authorities in 2014.
In 2018, the then Minister for Finance and Public Expenditure and Reform initiated an Inter-Departmental review of LPT. The purpose of the review was to inform the Minister in relation to any actions he may recommend to Government concerning the overall yield from LPT and its contribution to total tax revenue. The review was informed by the desirability of achieving relative stability, both over the short and longer terms, in LPT payments of liable persons. While the LPT Review was completed last year, having considered the findings of the Review, the Minister for Finance decided to defer the revaluation date for LPT purposes to 1 November 2020. However, due to the Covid-19 pandemic, the revaluation has now been deferred until 2021.
The Programme for Government commits to ensuring that in future all LPT collected will be retained in the county in which is collected. This is to be done on the basis that that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer. My Department will advance work on the implementation of this committment in the coming months.
