WE NEED CERTAINTY ABOUT THE LOCAL PROPERTY TAX

WE NOW know two things about the Local Property Tax. Firstly, the bad news is that, since it generates half-a-billion euro each year, it is here to stay. Secondly, the better news is that, with an election in the offing, there will be no dramatic increases for the foreseeable future.

In the current political climate, we could have a general election at any time. But odds are that the current strange hybrid minority coalition, led by Fine Gael and in office by grace of Fianna Fáil, will continue for another 12 months or so. It means that radical changes may well be put on the long finger.

But there are very important unanswered questions about the future of this tax – known in political circles by its initials LPT – especially about its fairness and the need for even-handed treatment of householders across the country.

As things stand, local councillors have the power to increase or reduce the tax rate by 15pc, depending on the shape of their local budgets. That potential variance means that one householder could face a property tax rate which is almost one-third more or less than a neighbouring householder, who happens to live in another council jurisdiction.

Taoiseach Leo Varadkar has today told this newspaper that he would like to see this 15pc plus-or-minus margin increased, though he has not yet said by how much.

Elsewhere in the Government apparatus, the thinking may be going in a different direction. There are reports that officials are suggesting removing councillors’ powers to reduce the tax.

A major concern will be about how increasing property values are managed when calculating the LPT. The property market was still at a low ebb in 2013 when this tax became a reality. There has since been a dramatic recovery, especially in Dublin and other urban areas. By one calculation, the increase in Dublin since 2012 has been up to 70pc. But the rise in property prices has been uneven and much slower in most rural areas.

Let’s not forget that rising property values have no material benefit to the vast majority of homeowners who have no intention of moving. But rising house prices can impose a hefty penalty on householders with no consideration given to the ability to pay LPT of people who are asset rich on paper but cash poor.

The valuation basis of the tax is due for review next year after six years of its existence.

All of these issues are already a worry for many householders, some older and on fixed incomes, living in houses of considerable notional value, but which they have called “home” for much of their adult lives.

It is time to deliver more certainty.