Exempt elderly homeowners from property tax – minister
Taoiseach’s plan to give councils more power could result in big gap between rates across the country
AN EXEMPTION from property tax for hundreds of thousands of pensioners is being proposed within the Government, the Irish Independent can reveal.
Ahead of a reworking of property tax, Independent Alliance members of the Coalition are demanding Finance Minister Paschal Donohoe introduce “full exemptions” for pensioners.
Those aged over 66 on fixed incomes and people with disabilities would avoid the tax under the proposals, made by independents including Transport Minister Shane Ross.
Mr Ross and colleagues have made a submission to the Department of Finance in which they are also seeking a cap on charges.
They say homeowners should not be forced to pay “a single euro more” when the re-evaluation of property prices is completed next year.
It comes hot on the heels on the ‘granny grant’ proposed by Mr Ross to reward elderly relatives for helping with childcare – a plan that has been all but ruled out by the Taoiseach.
The latest proposal is sure to spark heated debate as the Fine Gael side of the Government plans for a multi-tiered property tax.
This could see the gap between counties widening, and even result in neighbours in bordering counties paying significantly different rates.
Taoiseach Leo Varadkar wants to increase powers available for local authorities to alter charges. Already county councils can vary the standard rate up or down by 15pc – but Mr Varadkar told the Irish Independent: “I’d like them to be able to vary it downwards by more than 15pc.”
A nine-month review of the Local Property Tax (LPT), involving officials from Revenue and a number of Government departments, is due to be received by the Finance Minister shortly.
It is understood this could be in time for a Budget day announcement, as Fine Gael seeks to clarify what homeowners will face in the coming years, or else shortly afterwards.
It comes ahead of a re-evaluation of property prices in November next year which could, without intervention, lead to homeowners being hit with a massive tax hike from 2020.
Despite the surge in prices over recent years, the LPT is currently being charged based on the value of a person’s home in May 2013.
Mr Varadkar said: “What we want to avoid is a big hike in anybody’s property tax because values have gone up in the last couple of years.
“The main thing I’d like to see is to give local authorities a lot more flexibility.”
He suggested the Government could set a standard rate which would then be altered by councillors.
Mr Varadkar said some may “take extra revenue to improve local parks and local roads and local footpaths” but others could decide “they don’t need the entire windfall”.
However, this could lead to wide variations even within short distances, particularly in urban areas where county boundaries meet in closely set residential settings.
Currently, a house valued at between €300,000 and €350,000 is subject to a standard annual charge of €585.
Using the existing rules, three of the four local authorises in Dublin have lowered this by 15pc to €497, while one (Fingal) set the fee at €526.
Seven local authorities (Kerry, Laois, Limerick, Longford, Tipperary, Waterford and Wexford) have actually raised the charge above the standard rate by between 2.5pc and
10pc.
Mr Varadkar is proposing to allow the increase of up to a maximum of 15pc to continue, but suggested the limit for lowering the charge could go further.
This would mean that some councils – because they are better off financially, or because of political reasons – might significantly reduce the tax in their area.
The risk is this would lead to a patchwork of different property tax rates across the country, with different homeowners winning or losing depending on their address.
Asked whether local authorities could be trusted to set the rates, Mr Varadkar said: “If you’re serious about having real local government in Ireland, a big piece of that has to be about returning to local authorities the autonomy to raise taxation.
“A lot of people trace back the demise of local government in Ireland to the abolition of rates in the 1970s and there’s some truth on that.”
The new limits will form part of the renegotiation of the confidence and supply agreement with Fianna Fáil.
Exemptions
But, meanwhile, Mr Varadkar also has to consider the latest demands from the Independent Alliance.
In a document, seen by the newspaper, the alliance said many homeowners “struggle to cope with LPT, including older people on fixed incomes and those with disabilities”.
“The Independent Alliance supports full exemptions from LPT for these homeowners as well as a cap on LPT liabilities to ensure that no other homeowner pays a single euro more in LPT than they are currently paying,” the document states.
But Mr Varadkar told the Irish Independent that the LPT “is a tax that makes sense” to target people with property, assets and wealth.
“We shouldn’t tax work too much. We should tax assets, wealth, property. That’s done through a property tax.
“Nearly every country in the world has one and generally [the charge is] much higher than ours,” he said.