The Irish Independent reported on 25th October that the Fine Gael/Labour Government had broken its pledge to give the bulk of the Property Tax revenue back directly to the councils where it had been collected. The Government had promised that €4 out of every €5 of the Property Tax would be spent in the council areas where it was paid, with the remaining €1 going into a general fund for all local authorities.
However Government has now opted for a central fund which will divide the tax up between all local authorities and also to pay for Irish Water which is the new state agency taking over the running of water services across the country.
This reverse in Government policy means that local authorities with large populations, who would have expected to increase their revenue stream through the Property Tax, won’t be getting a dividend. The state expects to get €500m in Property Tax revenue in 2014.
What is really concerning is the report that there is no definite commitment to allow local authorities to keep 80% of the property tax funding collected in their area in 2015. The Independent report that the department will only say that it will make a “proportion of the proceeds available as a source of local funding” to councils.
While this should come as no surprise as the present Government has consistently reversed policy pledges and broken manifesto promises this move has huge implications for the newly elected councils in May 2014. The Property Tax was proposed and defended on the fundamental principal that the tax would be used exclusively for local services and that the revenue raised in a particular local authority would be spent in that local authority. What is happening now and what is proposed for 2015 is the complete opposite of this.
It is also worth remembering that one major reform of Local Government that is being introduced is the power of elected councillors to either increase or decrease the local property tax by 15%. The provision allowing local authorities to raise or drop the property tax by up to 15% from January 2015 was included in the Budget.
Raising the Property Tax within the lifetime of the next council would be completely unfair on hard-pressed homeowners considering the imposition of water charges as well as the tax increases that have become the norm over the last five years. If anything, councillors elected in May should be proposing measures that would lead to a cut in the tax.