While the coronavirus pandemic dealt a financial blow to all local authorities, it hit the coffers of Dublin City Council harder than most.
The city receives less direct Government funding than other local authorities, making it more dependent on raising its own money through rates and services such as planning and parking fees.
Though the Government is currently covering the rates bill, it has not made any commitment to compensate for other losses or for the additional costs associated with the pandemic such as homeless services, the ambulance service and PPE.
This has left the city council, which usually operates with a surplus, facing a €39 million black hole.
Council chief executive Owen Keegan saw an opportunity to partially plug this hole using the Local Property Tax (LPT).
Mr Keegan asked councillors to increase the 2021 LPT rate by 15 per cent given the parlous and unprecedented state of the council’s finances. This, he said, would realise €24 million, while even leaving it at the basic rate would result in a gain of €12 million, but councillors voted for the maximum allowable 15 per cent cut.
By now, householders should reasonably expect to be paying more property tax than they were when LPT was introduced seven years ago. The tax is based on 2013 property values, and was due to be reassessed in 2016, but that process, already deferred several times, has been kicked down the road until November next year.
Outdated valuation
The result of the outdated valuation means that for LPT purposes the average property value for a Dublin home is in the €200,000-€250,000 band. Property values in Dublin have increased by an average of 87 per cent since 2013, so a house at the mid-point of the band worth €225,000 in 2013 would be worth €420,000 today.
This average Dubliner would, at the basic LPT rate, pay €405 a year – with the 15 per cent rates cut, that homeowner will pay €344.25, just over €60 less a year.
Had the council approved the 15 per cent increase sought by Mr Keegan, that bill would have risen to €465.75.
More than half of Dubliners live in houses with LPT values under €200,000, meaning the benefit they receive from the reduction ranges from €13.50 a year for those with houses up to €100,000, to €47.25 a year for those with houses valued in the €150,000-€200,000 band.
Those who gain the most from the cut are homeowners with the highest-value properties. At the top of the tree, those with homes valued in 2013 at €1 million would be paying €1,755.00 or just over €2,000 if Mr Keegan had got his way, but instead will get a €264 reduction from the councillors.
Not all councillors voted for the cut.
The Greens and Labour proposed a 5 per cent increase on the basic rate. The Social Democrats also voted against the discount and said the basic rate should stand.
Defeated
They were, however, defeated by Fianna Fáil, Fine Gael, Sinn Féin, People Before Profit and most Independents who went for the full cut, though not for the same reasons.
Fianna Fail and Fine Gael took the position that the tax is unfair on Dubliners, as 20 per cent of the money collected in Dublin is shared out among poorer, largely rural local authorities. Sinn Féin said it opposes a tax on homes, and the left says the LPT has been used to cut central Government funding and was a regressive tax.
Councillors appear to be relying on the Government stepping in and filling the funding gap, as it has so far done with commercial rates. However, while it is unlikely it will allow the lights to go out, cuts to services are inevitable when the city’s budget is determined in November.
The council has not so far been willing to identify these cuts, and is reluctant to do so ahead of the national budget, for fear of creating hostages to fortune, but it is likely services which make the city more livable – street maintenance, park services and community programmes – will be first hit.
