Dublin homeowners, the State biggest payers of local property tax, will see their bills fall next year, following the decision of city councillors to reduce the tax rate by 15 per cent.
Councillors tonight voted to take the tax cut, despite warnings from council chief executive Owen Keegan the decision to cut costs for property owners could hit homeless services.
The 15 per cent cut means a house valued in May 2013 at €325,000 that currently has a property tax liability of €585 will next year have a bill of €497.25.
Councillors in all 31 local authorities across the State have the right to vary local property tax by up to 15 per cent from next year.
Local authorities have just one more week, until September 30th, to tell Revenue what level of cut, or increase, they intend to apply, if any.
Next year each city or county council will retain 80 per cent of the tax collected in its area, with 20 per cent going to a central fund to be shared nationally.
However any reductions agreed by councillors apply only to the portion held by the local authority, the cash going into the central pot stays the same.
If Dublin City Councillors had not changed the rate the council would net €63.5 million, with the 15 per cent reduction the council will get just €51.1 million.
Council chief executive Owen Keegan had urged councillors not to implement a 15 per cent cut, because of a lack of clarity over Government funding of homeless services next year.
In a report to councillors Mr Keegan said despite requests, the Department of the Environment had not given sufficient clarity on its plans to fund housing, roads and homeless services, for councillors to know what money would be available to run the city in 2015.
“Due caution must be applied to reflect the lack of specific data,” he said.
The council required €45.3 million from Government to fund homeless services in 2015 he said.
However, Mr Keegan said increase in property prices in the city, which had already risen by almost 22 per cent in the year to June 2014, was likely to result in a “sharp increase” in the tax value when properties were reassessed in November 2016. He had recommended the councillors reduce the tax by 5 per cent each year for the next three years, €4.1 million loss in tax yield each year.
However the vast majority of councillors, 46 voted for the 15 per cent cut, with just 12 against.
Councillors also passed a motion calling for the council’s budget strategy to be amended to restore Government to restore funding for homeless services back to historic levels of 90 per cent of what the council needed.
There is no guarantee the Government would provide this funding.
Green Party councillor Ciarán Cuffe was the only councillor to speak in favour of Mr Keegan's proposal saying reducing the rate by 15 per cent was "auction politics at its worst".
He said homeless people would “love the luxury” of having a home on which to pay property tax.
Labour councillors put forward a 7.5 per cent decrease, with the €6 million income which would be retained put largely towards homeless and housing services, with €1 million of it going to street cleaning and graffiti removal, and half a million each to parks and community projects. but their motion was defeated.
Dermot Lacey (Lab) said while cutting taxes is popular the council had an obligation to protect its own finances and provide services to the people who needed them.
Sinn Féin councillor Seamas McGrattan said the tax was unfair and should be abolished. People Before Profit councillor Bríd Smith said the people of the city deserved the full reduction.
Fine Gael councillor Kieran Binchy said money had to be put back into the pockets of hard pressed Dubliners.
Last July the council conducted a survey of Dubliners on whether it should raise or lower the property tax.
Just under 900 surveys were completed 86 per cent sought a variation of the tax and of those 97 per cent wanted it reduced.
More than 85 per cent were in favour of a reduction at the maximum end of up to 15 per cent.
The base rate of the tax is 0.18 per cent for properties worth up to €1 million. For properties worth over €1 million the first million is taxed at 0.18 per cent with anything over that taxed at 0.25 per cent. The compliance rate in the Dublin City Council area is 93.6 per cent.
Cork County Council
Meanwhile, Cork County Council has voted to reduce its Local Property Tax charge by 10 per cent , which will see the council return €4.2 million to householders from its €42 million LPT collection.
Fianna Fáil proposed the 10 per cent cut but Sinn Fein tabled an amendment seeking a 15pc but this was rejected as was a Fine Gael motion proposing no cut to the LPT.
Councillors voted by 36-16 in favour of the original 10 per cent cut proposed by Fianna Fail with Sinn Fein joining with Fianna Fail, Labour and some independents to pass the motion.
Mayor of Cork County, Cllr Alan Coleman of Fianna Fail told The Irish Times that councillors felt that the council could maintain 2014 service levels on a 10 per cent cut to the LPT.
“Councillors felt that a 15per cent cut would have meant a reduction in services to the public whereas a 10 per cent cut could be sustained without cutting back on services beyond was provided in 2014,” he said.
Kerry voted for no change to rates of property tax there.