Minister for Finance rules out significant property-tax rise

A review of the local property tax (LPT) will focus on keeping bills for households roughly in line with current levels in the years ahead, Minister for Finance Paschal Donohoe has said.

This will mean significant changes in the tax, as revaluations next year would otherwise lead to big increases in property tax bills from 2020 onwards.

The review, which will begin next month, will look at the entire basis on which the tax is collected. It will re-examine the recommendations of a 2015 report by Dr Don Thornhill, which said the level of tax charged each year should be based on agreed funding needs for local authorities, thus leading to some stability in household bills from year to year.

The Thornhill report also recommended the ending of an exemption for new houses bought from builders and developers. If this is accepted, it would mean thousands who purchased new houses since 2013 would be brought into the net for the first time.

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Deferral options

The review will also look at the deferral options open to those in financial difficulty or on very low incomes.

Launching the review, the Minister said it would be “informed by the principle of achieving relative stability in the LPT payments of those liable for the tax”. The house prices on which the tax is based are due to be revalued in November 2019 for the first time since it was introduced in 2013.

An average rise of 71 per cent in house prices in the meantime – and likely further increases up to November 2019 – mean most households would face a significant increase in their payments in 2020, unless the Government acts to avoid this.

“The review will be informed by the desirability of achieving relative stability, both over the short and longer terms, in LPT payments,” the announcement said. It is due to make recommendations to Government by August.

Public consultation

The tax raised €477 million last year, according to figures recently published by the Revenue Commissioners, less that 1 per cent of total tax revenue. Officials from the Department of Finance told the Oireachtas Committee on Budgetary Oversight on Tuesday the review will include a public consultation process.

Sinn Féin finance spokesman Pearse Doherty asked whether the review would look at the fact the tax was levied on those in mortgage arrears and those in negative equity.

Assistant secretary of the department John Hogan said he did not want to comment other than to state that there were particular recommendations in the Thornhill report for those who were in mortgage distress. The review would be conscious of those who were in difficulty, he said.