Homeowners who had been hoping for a reduction in the level of property tax they must pay following May’s local elections could be in for a rude awakening.
Cork County Council became the first local authority last month to commit to a 15% cut in the property tax. A number of other councils around the country are said to be considering a similar cut in an effort to reduce the financial burden on households who will have the additional expense of water charges to pay later this year.
However, according to a report in yesterday’s Irish Times, councillors are to be warned by county and city managers about the possible knock-on effects of reducing the property tax in their areas.
Galway County Council is one of a handful who had proposed the matter last month only to postpone a decision until all implications were available to be presented to councillors.
Now guidance documents have been issued to local councils by the Department of the Environment advising them on the matter. Amongst a number of recommendations, it says local authorities should consult the public before varying the tax rates.
Councils have the power to increase or decrease the rate of local property tax by 15% from next year onwards but they must notify the Revenue Commissioners of their intentions before September 30th, with most councils set to decide on the matter this month.
Senior officials in a number of councils have already outlined to councillors the consequences of varying the rates.
The guidance issued is in tandem with a statutory instrument on the property tax regulations brought into effect this week by Minister for the Environment Phil Hogan.
The guidelines say “any variation in the local property tax rate will have an impact including on the local authority, on those paying LPT, and on those receiving council services.”
It adds: “The effect of a variation on all stakeholders must be considered.”
The county or city manager – now renamed chief executive – must prepare an estimate of the financial effect of varying the rates on the relevant council.
The Department of the Environment says this must consider, at “a minimum”, the potential impact on homeowners who pay the tax, the impact on revenue raised and the impact on service-delivery plans in the local authority area.
Councils must also take into account their financial positions, as well as income and spending, when considering a rate change.
“In proposing to increase or decrease the income of the authority, the members must be cognisant of the current levels and types of income, and the level of expenditure that is currently being met, including those elements of expenditure which are strategic, non-discretionary and cannot be reduced in the short term.”