No change to property tax in 2017

Cavan County Councillors agreed to make no change to the rate of Local Property Tax (LPT) in 2017 at a meeting on Monday afternoon.

Each local authority can, as part of their 'reserved function’, decide to vary the basic rate of the LPT up or down by 15%. At this week’s meeting, the council’s head of finance, Des Maguire outlined to members the financial constraints that the local authority is operating under and advised that any reduction of the tax would impact on services in the county.
The decision to maintain the rate of tax for 2017 was proposed by Cllr John Paul Feeley (FF) and seconded by his party colleague Cllr Clifford Kelly.
The decision means that Cavan County Council will receive some €9.2M in property taxes next year including a top up of €5,078,432 from the central Equalisation Fund.
Mr Maguire had explained that the impact of a 15% cut in the local property tax rate would mean a loss of income to the council in the sum of €660,315 in 2017. He emphasised that this “would have a huge impact on our services”.
Going through the report, the finance chief explained that each local authority retains 80% of the LPT relating to its area and, in 2017, that will amount to €3,521,655. The balance of 20% goes into a central Equalisation Fund.
“Cavan benefits from the equalisation fund to the tune of €5,958,846, which brings us back up to the baseline for 2017 amounting to €9,480,501,” he said.
He pointed out that 50.1% of properties in the county were in the €0 to €100,000 band, 40% in the €100,001 to €150,000 band and 7.4% in the €150,001 to €250,000 band.
Consequentially, a 15% reduction would only have generated savings of €13.50 per year in the majority of cases or €33.75 per annum for those in the second bracket (40% of households in the county).

Compliance rates
Mr Maguire told Cllr Sean Smith that 94.8% of people had paid the property tax in the county by June 30, 2016, and the money is collected by Revenue.
Cllr Feeley said that because of the Property Tax revenue, there is a public perception out there that the council has a substantial amount of additional money available to it to deal with the problems it is facing and issues that are raised by people throughout the county.
“That is obviously not the case and we are sitting on the same level of funding since 2014, with no sign of any improvement on that,” he remarked.
The west Cavan councillor added that there was no appetite out there, or in the chamber, for an increase in the tax.
“While we might like to reduce it, the reality is, it would make an already difficult situation even more difficult. Therefore I would propose that we leave the Local Property Tax at its current rate,” he said.
Sinn Féin’s Eugene Greenan told the meeting that he wished the public to know that the council had not received any additional income since the introduction of the property tax.
“I have always opposed the Local Property Tax and there is now strong evidence that the Local Property Tax model is not sustainable and this can be seen by the increase in the number of local authorities now depending on the Equalisation Fund,” remarked Cllr Greenan.
He said that the property tax was the wedge that was further dividing the two tier recovery of this country.
“The State took in more tax last year than it did at the height of the Celtic Tiger and yet our funding remains the same,” said Cllr Greenan.
“The Sinn Féin Group don’t want to jeopardise front line services that the council provides in this county and the jobs that the council supports. For that reason, we propose that the Local Property Tax remains unchanged,” he added.

'Irritated’
“The general public and our electorate out there are saying 'yous now have the property tax, yous have the motor tax’. They are fully convinced that every penny of motor tax that comes into the local authority is held by the local authority. They are really irritated by the fact that the money they are paying and the extra monies they thought was going to be in the coffers of the local authority are not there,” said Cllr Kelly.
He said he would be opposed to any increase in the Property Tax but added that the roads would deteriorate seriously if funding to the council is not increased.
Endeavouring to tease out the reality of the funding situation that now pertains, Cllr Paddy O’Reilly (FG) said that the council previously received a block grant of €4.5M.
“We are now getting €5.9M under the Equalisation Fund – so we are €1.4million to the better?” he asked.
However, he said this was still not enough. “We are not getting sufficient funding back from national Government. The €1.4M, which on its own is leaving us better off, is not sufficient. We in the Fine Gael Group will not be supporting a rise in the Property Tax,” he said.
Mr Maguire agreed that “it is far from satisfactory” that the property tax is handled in isolation from commercial rates.
He also agreed that the funding model is unsustainable.
Mr Maguire also welcomed the decision not to reduce the property tax for the coming year. “We just would not be able to provide the level of services that we currently provide, if there was any reduction,” he said.
The head of finance told Cllr Winston Bennett (FG) that if the tax was raised by two per cent, the council would get a further €88,000 income.
CEO Tommy Ryan further explained that there is no matching funds if the tax is increased, but the council gets to keep the additional income.
Cllr Peter McVitty said that, while he accepted that there had been no rise for ratepayers in recent years, any talk of any increase in rates would be very hard to sell to people in small shops in rural towns endeavouring to keep their heads above water.
Cllr Paddy O’Reilly was mystified as to why the property tax had to be dealt with by a certain deadline and the rates were being left until later at the Estimates meeting. “I can’t understand it and that is what we are being asked to do here today,” he said.
Cllr Sean Smith (FF) suggested that a resolution be sent to the relevant people outlining that the rates and the property tax matters should be taken in unison.
He added - “if this is local government reform in action, it is backwards we are going.”