Further consultation aimed at ensuring relative stability for all taxpayers in their LPT bills & that any increases would modest, affordable & fair The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, briefed his Government colleagues this evening (Tuesday) on the report of the review of the Local Property Tax (LPT) which his Department has completed in conjunction with the Departments of the Taoiseach, Public Expenditure and Reform, Housing, Planning and Local Government and the Revenue Commissioners.
The review was charged in particular with examining the impact on LPT bills of property price developments since the valuation date of 1st May 2013. In that context the review considered a number of scenarios for changes to the tax involving different rate and tax band structures.
However, having considered the review and in particular the background of significant, but geographically uneven, increases in residential property price levels, Minister Donohoe believes it necessary to engage in further consultation to identify a scenario that would deliver on the condition set by the Minister that there should be relative stability for all taxpayers in their LPT bills and that any increases should be modest and affordable. The Minister is also conscious of the importance of maintaining simplicity in the operation of the LPT which was a major success factor in its successful introduction.
Minister Donohoe has therefore decided to defer the valuation date from 1st November 2019 to 1st November 2020. With this new valuation date, there will be no change in LPT bills by central Government until 2021.
The Minister’s deferral of the revaluation date will provide sufficient time for the Oireachtas Budgetary Oversight Committee to consider the review report in the light of the Committee’s recommendations in its report on the local property tax of 21st March 2018. The Minister for Finance will engage with the Committee to identify a design that can deliver on the conditions he set for the LPT.
Commenting on the decision Minister Donohoe said:
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. I have decided in the circumstances to defer the revaluation until November 2020 and, in line with the committee’s request, I am referring the review report to the Budgetary Oversight Committee for its consideration.
In my engagement with the Committee I will seek to promote the policy objectives that should underpin any changes to the tax. These are:
- 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.
It is my expectation that the reformed LPT will be based on a model of band widening combined with LPT rate changes. I support retention of the option for Local Authorities to reduce the LPT rate for their area by use of a downward Local Adjustment Factor (LAF). I will also engage with the Budget Oversight Committee on the issues of management fees.
The deferral will provide space within which I will try to build a consensus as to the future direction of the LPT based on the response of the Committee and further work which I have asked my Department to undertake.