Budget wording altered to hide reference to councils passing on property tax

Tens of thousands in local authority housing likely to face rent increases

Internal Department of Finance emails indicate that officials were aware that local authorities were free to pass on the charge but sensitive about making this known publicly. Photograph: Frank Miller

Internal Department of Finance emails indicate that officials were aware that local authorities were free to pass on the charge but sensitive about making this known publicly. Photograph: Frank Miller

Mon, Jun 24, 2013, 01:00

Government officials changed the wording of the budget to obscure the fact that thousands of local authority tenants can be made liable for the property tax, internal documents show.

Local authorities, rather than tenants, are directly liable for property tax for up to 130,000 social housing units across the State.

There was confusion following the budget about whether city and county councils would be able pass the tax on to tenants.

However, internal Department of Finance emails indicate that officials were aware that local authorities were free to pass on the charge but sensitive about making this known publicly.

An email from a senior Department of Finance official in late November 2012 shows a draft wording for the budget was changed in the days leading up to the official announcement. The draft stated that while liability for the tax would rest with the local authority, “they may pass on the cost to the tenant”.

Following days
This was the source of discussion among officials in the Department of Finance and the Revenue Commissioners over the following days.

A senior department official noted to another official: “There is a tricky message to get across here and you should check up the line as to how far you should go in saying that the charge should be passed on.”

By December 2nd this section was deleted from the draft wording of the 2013 Budget.

The final budget document was published three days later on December 5th. It has since been confirmed that local authorities can pass on the charge to tenants if they so wish.

As a result, tens of thousands local authority tenants are likely to face rent increases as cash-strapped councils try to balance their books.

Most local authorities say they will formally decide on what approach they will take towards the end of this year as councils will be liable for the tax from 2014 onwards. Some have signalled that they will increase rents to help pay for the tax.

Department of Environment figures indicate that local authorities own almost 130,000 houses or flats, which they lease to tenants. Each city and county council looks set to pay tax of between €90 and €115 per housing unit. This means the bill for local authorities could run up to €12 million.

The local authority with the greater number of local authority houses is Dublin City Council. It owns 26,875 properties which it leases to tenants and faces a bill of up to €2.5 million.


Providers
Other major providers of local authority accommodation include South Dublin County Council (9,000 units); Cork City Council (8,800); Fingal (4,550); Dún Laoghaire-Rathdown (4,400); Waterford (2,969); Limerick (2,781); and Galway (2,265).

Not all of these properties will be levied with the property tax. Local authority or social housing for people with special housing needs, such as older people or those with disabilities, are exempt.