An Oireachtas committee will on Tuesday take the first steps to modify a dramatic hike in the local property tax (LPT) which is due to kick in in 2019.
The all-party budgetary oversight committee has invited the Revenue Commissioners to its meeting as it begins to review the manner in which the tax will be re-evaluated and calculated in 2019.
At present more than 1.7 million householders pay LPT based on valuations of their homes made in 2013, when the property market was at a low point.
The last government deferred revaluations of properties until 2019. However, since 2013 property prices have increased substantially, particularly in the Dublin region where they have climbed over 60 per cent since the lowest point in some areas.
Four years ago, a suburban house in Dublin valued at €240,000 was liable to LPT of €405 per annum. Many of the houses in that bracket have since doubled in value. If the house is worth €480,000 in 2019, its owner will pay €855 in that year, more than double the current rate of €405.
Outside Dublin and surrounding commuting counties, the increases in property prices have been far more modest. In Donegal, for example, values have increased by only 10-15 per cent in some areas. Likewise, there have been relatively small increases in property values in counties such as Leitrim, Roscommon, Monaghan, Cavan and Longford.
Compliance rate
In 2016, Revenue collected a total of €443 million in LPT from 1.88 million properties. In all, €169 million of that was raised in the four Dublin local authorities. Revenue reported that 97 per cent of householders were in compliance with the tax.
If the re-evaluations were to go ahead without revision, it would mean the annual take from LPT in 2019 could be close to €1 billion if property prices continue to increase over the next 12 months.
When the original valuations were made in 2013, less than 10 per cent of all properties in the State were worth €300,000 or more. The rate in three of the four Dublin local authorities is twice that, according to the latest property price indexes. And in the fourth, Dún Laoghaire, almost 60 per cent of properties are now valued at over €300,000.
At present, councils have some discretion on varying the LPT charge in their area, but there is a 15 per cent limit on how much it can be increased or reduced. The committee may also look at that limit, and assess the impact of increasing that threshold.
Minister for Finance Paschal Donohoe has said he is willing to review the proposed changes but any adjustment would be made in next year’s budget ahead of the 2019 introduction.
