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'People know where they stand until 2021': Local Property Tax changes to be deferred by one year

Finance Minister Paschal Donohoe made the announcement after a late night Cabinet meeting.

Image: Shutterstock/shutterupeire

Updated Apr 3rd 2019, 9:13 AM

PLANNED CHANGES TO the local property tax are to be deferred by one year, Finance and Public Expenditure Minister Paschal Donohoe announced last night.

The Local Property Tax (LPT) review report examined the impact on LPT bills and considered a number of possible changes to the tax such as different rate and tax band structures. Having discussed the report at Cabinet yesterday, the minister decided to push out the date when house valuation would be considered again. 

Donohoe decided to defer the valuation date from 1 November 2019 to 1 November 2020.

With this new valuation date, there will be no change in LPT bills sent out by Government until 2021.

There have been concerns in recent months about changes to the property tax. 

Amid speculation about revised property tax rates, Donohoe said in January that any changes will be “affordable and predictable”.

Currently, property tax is based on the market value of a house, but due to the rapid increase in house prices, there have been concerns about the massive leap in tax homeowners will have to pay.

Donohoe told Morning Ireland the reason for the deferral is to avoid a surge in bills next year. 

Firstly, people now know where they stand until 2021, secondly, I want to keep and reform a local property tax. I want to avoid a sudden surge in bills early next year and I believe we can put in place changes that will ensure there are no significant increases for the majority of people.

Frozen

In 2015, the LPT being paid by homeowners was frozen until 2019, meaning that people whose properties had increased in price still only had to pay the same rate of tax they have since the original LPT valuations in 2013.

Another round of valuations were due this year, but because house prices have been rising in the past several years, politicians were concerned that the LPT would rise dramatically when the valuation date of March 2013 was updated.

In a statement last night, the department said the deferral of the revaluation date of homes will provide sufficient time for the Oireachtas Budgetary Oversight Committee to consider the review report.

The minister has also committed to engage with the committee to “identify a design that can deliver” on the conditions he set for the LPT.

“I have indicated consistently that it was my aim to try to ensure stability in the LPT bills of all taxpayers. Increases for taxpayers in LPT, if any, should be modest, affordable and fair. I have also stated that I would make the position regarding LPT bills for 2020 clear in good time so that households would be aware in advance of the November 2019 revaluation date where their 2020 LPT bills would stand,” said Donohoe. 

“I have decided in the circumstances to defer the revaluation until November 2020,” he said.

“In my engagement with the [Budgetry Oversight] committee I will seek to promote the policy objectives that should underpin any changes to the tax.”

fG 997_90567125 Pictured Minister for Finance and Public Expenditure Paschal O Donohoe TD speaking the the media on Day 2 of the Fine Gael National Conference in Wexford. Source: Sam Boal via Rollingnews.ie

The minister outlined the objectives as follows:

  • Protection of the overall yield
  • Relative stability in household liabilities with modest and affordable increases should they arise
  • Integration of new properties into the LPT base
  • Maintenance of the tax base with a small number of exemptions
  • Upholding the progressivity of the tax.

He added that it is his expectation that the reformed LPT will be based on a model of band widening combined with LPT rate changes.

Donohoe said he supports the retention of the option for Local Authorities to reduce the LPT rate for their area, and added that he will also engage with the Budget Oversight Committee on the issues of management fees, which was recently a matter raised by Fianna Fáil in a private members Bill.

Fianna Fáil’s Michael McGrath told TheJournal.ie last night that his party made a submission on the tax reform almost a year ago.

“We expected the government to bring forward proposals for the reform of the LPT long before now. It’s clear the government is running scared and is more worried about upcoming elections than reforming the tax.

“We believe it is possible to reform the tax in a way that provides certainty around the tax for the next number of years and at the same time doesn’t result in household LPT bills increasing in line with their property valuation,” he said. 

The Finance Minister is expected to publish a report later today outlining the options available to him. 

“It is very complicated and I simply want to have more time in order to ensure I can reach a consensus on the future of this tax and avoid a sudden surge in the bills that people have to pay,” Donohoe told Morning Ireland. 

It will continue to be value based and I do believe in the Oireachtas we can get consensus in a model that ensures that majority of people’s LPT bill will not go up in the future and those that do face an increase, it will be the increase of a band. In order to achieve that it will take time to reach an agreement with opposition parties on this matter.  

With reporting from Adam Daly

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