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Majority could see no change to Local Property Tax under re-calculation

A review of the Local Property Tax (LPT) has come up with five potential scenarios for re-calcula...
Jack Quann
Jack Quann

16.45 3 Apr 2019


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Majority could see no change t...

Majority could see no change to Local Property Tax under re-calculation

Jack Quann
Jack Quann

16.45 3 Apr 2019


Share this article


A review of the Local Property Tax (LPT) has come up with five potential scenarios for re-calculating the tax.

Introduced back in 2012, it is used as a source of funding for local authorities.

The tax has yielded approximately €2.7bn since its introduction - however, valuations are based on May 2013 levels.

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One scenario suggested for a re-calculation is to increase all of the valuation band thresholds by 80%.

This would see 82% of properties with no change to their LPT.

While 16% would have an increase of between €51 to €100, and just 0.5% would see an increase between €151 to €200.

"The midpoint of each band increases correspondingly and the rate is reduced to leave the liability in each band unchanged", a new Department of Finance report has said.

Under this plan, there would be no change to 57.7% of households in Dublin, and 94.2% of households outside Dublin would also stay the same.

While 17.5% of households would increase by one band, just 0.4% would go up by two or more bands.

Another scenario is based on a central LPT rate of 0.114% for all properties, producing some €500m.

A third is based on targeting individual local authority yields equal to the expected current yield for 2018.

The rate in each local authority would be adjusted to meet these targets following estimated valuation increases.

The report noted: "National property prices reached a trough around March 2013, where the national property price index was 55% below the peak level previously reached in April 2007.

"Since 2013, prices have grown rapidly with prices 18% higher in 2014.

"While this growth rate was the highest in a single year period the rates continue to be elevated, with a 7% increase in 2015, 9% in 2016 and 12% in 2017.

"The increases in the first eight months of 2018 indicate growth continuing along this trajectory."

Nationally, property prices are 80% higher than they were at the introduction of the LPT, though around 20% below the 2007 peak.

They are also around 82% higher in Dublin and 76% higher outside of Dublin as of August 2018, than they were in May 2013.

Finance Minister Paschal Donohoe has said he believes it necessary to engage in further consultation.

He has therefore decided to defer the valuation date from November 1st 2019 to November 1st 2020.

There will be no change in LPT bills by the Government until 2021.

Local Property Tax Finance Minister Paschal Donohoe outside Government Buildings in Dublin speaking about a report on the Local Property Tax | Image: Sam Boal/RollingNews.ie

On Newstalk Breakfast earlier, Minister Donohoe defended the Government’s decision to put off changes for another year.

He admitted that he has been aware of the need for these changes “for a while”, but said he is addressing it now because he does not believe either of the options put to him by the Oireachtas “delivered the objectives many people in the Oireachtas think.”

He said it will take some time to reach agreement in the Oireachtas on the new approach.

“I am saying people will know where they stand up until 2021 and I am saying, I am going to use the coming months to secure the future of this tax".

“It is a deferral of a single year.

“I think once the Oireachtas becomes aware of all of the complexities of the different options that we will have to consider, it simply will take more time than many anticipate to get agreement on the future of this tax.”

 


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Department Of Finance LPT Local Property Tax Paschal Donohoe Property Tax Re-calculating Property Tax Scenarios

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