It is the time of year when local council decide whether to adjust the local property tax (LPT) bills of householders in their area. Under the rules they can choose to vary the amount of LPT to be paid upwards or downwards from a base figure. Cutting, while popular, leaves the council with less money to spend. The opposite calculus applies to increases.
Looking at the decisions made so far, and the debates that have led to them, one thing is clear. There remains a huge reluctance in Ireland to tax residential property. Strangely, the strongest critics of the tax are those further to the left, including Sinn Féin and People before Profit/Solidarity. Housing is by the far the main source of wealth held by Irish people, but these parties object at every turn to raising tax on it.
Too many councillors are still refusing to even collect the baseline level of the tax and are thus leaving less cash for their councils to spend. Councillors in Dun Laoghaire-Rathdown, which has the most expensive house prices in the State, voted to continue the maximum reduction of 15 per cent from the baseline level set for the tax. This costs the council €10 million in annual income.
South Dublin County Council – where a reduction of 15 per cent from the baseline had been in place – voted to reduce this to 7.5 per cent, though the resulting increase in bills will be tiny in most cases. The decision in Fingal is to reduce the charge by 5 per cent, compared to 7.5 per cent previously. Outside Dublin, councils in Carlow and Wicklow both voted to maintain charges slightly above the baseline – arguing that this underpins important services for the public.
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As well as opposition from many on the left to the tax, in some council – such as Dun Laoghaire-Rathdown – Fine Gael and Fianna Fáil councillors have supported cuts in bills. At a time when councils are scrambling for cash, this smacks of populism. True, bills may increase for some next year anyhow due to a reform of the tax announced by Minister for Finance, Paschal Donohoe. But the additional amounts to be paid will be small for most households. And surely those with properties of €1 million or more can be asked to pay a bit extra?
In most cases council management clearly spell out to councillors the implications of their LPT decisions. That many still vote to undermine the funding of local services must be dispiriting for those who actually have to deliver them.
At a national level, it is clear that there is no political appetite to increase LPT as a source of revenue, which would be a welcome widening of a very narrow tax base. The reform programme which will apply from next year was cautious and the tax will remain a small contributor to the exchequer. This means that when more tax is needed in the years ahead – as it will be – it will be income taxpayers who will again be hit.
