Local Property Tax – The Facts
THE Local Property Tax (LPT) is an annual tax charged on all residential properties in Ireland. It came into effect in 2013 and is collected by the Revenue Commissioners. The basic rate of LPT depends on the value of your home, so if your house is valued between €0k- €100k, the rate of LPT is €90; valued between 100k-150k, the rate is €225; valued between 150k-200k, the rate is €315; valued between 200k – 250k, the rate is €405.
Annually, the Local Property Tax raises approximately €9.3m for Waterford City & County Council, which contributes to the cost of providing a range of local services, including libraries, public lighting, road maintenance, housing services, fire services, supporting community initiatives, dealing with illegal dumping and littering, beach management and tourism development initiatives.
Since 2015, local authorities have been able to adjust the rate of LPT according to their need by up to either +15% or -15%. For the first two years, Waterford Council decided to leave the LPT at the basic rate. In 2017, they increased it by 2.5% and did so again in 2018. This decision was made by way of councillor vote.
Every year, the council’s pact control the vote to decide whether or not the rate increases, decreases, or stays the same. The pact is made up of a majority group of councillors – in recent years, this was Fianna Fáil and Fine Gael but this year, because of local election results, the controlling pact is made up of Sinn Fein, Green Party, Labour and Independents. This is the group that will decide a number of issues over the next five years, such as who becomes mayor and how much local property tax we pay – essentially anything that goes to a vote in council, the pact, as long as they can all agree, will have control.
It was the pact of Fianna Fáil and Fine Gael who were responsible for increasing the property tax in 2017 and 2018, much to the consternation of Sinn Fein councillors. In a statement released to the press after last year’s Local Council Budget meeting, Sinn Fein stated that they “weren’t in the business of breaking commitments they made to their supporters and to the electorate” and that “they could not support a draft budget due to its increase in the Local Property Tax”.
On Tuesday, September 24, 31 members of Waterford City & County Council sat in the Council chambers in Dungarvan to vote on whether they would leave the rate of LPT at the basic rate (like in 2015 and 2016) or whether they would increase it, or decrease it. The decision was in the hands of the new pact, or as they have called themselves, “The Progressive Alliance”.
Here is how that meeting went down:
LIKE the last three Local Property Tax meetings, the one scheduled for 5pm on Tuesday, September 24, began with Waterford City & County Council’s Chief Executive, Michael Walsh making his case for an increase in the tax. Mr Walsh said he appreciated that the Council had “provided for modest increases” in the previous year but said that in order to address issues in housing, roads, economic development etc “in many respects that increase was inadequate”. He subsequently proposed an increase of 10%. It was now up to the councillors to make a proposal, either supporting the increase or a counter proposal with a recommendation of their own.
On behalf of the Council Pact, which is made up of Sinn Fein, The Green Party, The Labour Party and the Independents, Labour Councillor Thomas Phelan made their alternative proposal.
“While I welcome the CEO’s acknowledgement that there is a need for increased funding, I think there is also a need for stability and certainty,” Cllr Phelan said. “In the interest of prudence and certainty, I propose that the 10% increase be rejected and that the LPT rate be the same for 2020 as it was in 2019.”
Fine Gael’s Cllr John Cummins sought a clarification from the “regressive alliance” that they were proposing a “2.5% increase” to which Mayor John Pratt replied that it was “retaining what was there last year”.
It soon became clear that this year’s LPT meeting was about to become a war of words, with one side (the Pact) determined not to use the word “increase” while the other (Fianna Fáil/Fine Gael) doing everything in their power to make them say it.
“What is Councillor Phelan proposing to do with the baseline rate, as set down by the Government?” asked Fine Gael’s Damien Geoghegan.
“It’s a 2.5% increase, which you yourself proposed last year,” replied Mayor Pratt.
At this point about 15 councillors spoke up at once and deciphering what they were saying was a futile exercise. When the noise died down, Independent Councillor Joe Kelly seconded Cllr Phelan’s proposal, as the other side prepared their own.
“We would like to propose a reduction of 5% on the base level of the property tax,” said Cllr John Cummins. “We believe that the economy is exceptionally fragile at the moment, particularly in light of Brexit, and we don’t really know what’s going to happen over the next number of weeks. When we increased the tax recently it was for a very specific purpose in terms of a pay agreement. Thankfully, we do not have that situation now and we’re in a position to be able to give back what we took over the last couple of years.”
The wage agreement mentioned was a reference to wage increases under the public service pay agreement, which were previously funded by councils but were now being funded by Central Government.
Independent Councillor Matt Shanahan immediately replied, saying that he was “very disappointed” by the FF/FG proposal.
“As someone who has campaigned for enhanced public services in health over the past number of years, particularly in the hands of Fine Gael…”
Cllr Shanahan was interrupted by Cllr Cummins who said that this was his opportunity to give money back to the people.
Cllr Shanahan responded by saying that the proposal by FF/FG was “cynical in the extreme” and he wouldn’t be supporting it. This was a sentiment echoed by Sinn Fein councillor Conor McGuinness.
“I think it’s strange how Cllr Cummins and his colleagues in Fine Gael and Fianna Fáil have discovered a social conscience at this very late stage having been in Government in one form or another over the last few years,” Cllr McGuinness said.
“You promised the people you’d abolish the Local Property Tax completely,” interjected Cllr Damien Geoghegan. “You have a chance to reduce it and you won’t even take it.”
Cllr McGuinness responded by clarifying that Sinn Fein promised to abolish LPT, when in Government, which was met with more cries of “reduce it then!”
What followed was a scene not too dissimilar from one you’d find in a secondary school with councillors throwing their hands in the air, hoping the mayor would call on them for an opportunity to stick the boot in to the other side.
Somehow, the scene got even more farcical when Fianna Fáil’s Eamon Quinlan took his opportunity to speak.
“I must be a naïve young man,” he said. “I’m surprised at Sinn Fein’s position… I thought they were going to vote with us because I have here in my hand Sinn Fein’s local election manifesto where it says, and I quote, “the Property Tax is a totally unjust tax… we have proposed to reduce the LPT by the maximum 15% every year since 2015.”
In something never before heard in council chambers, Cllr Quinlan played an audio clip of Sinn Fein’s Cllr Jim Griffin speaking about the LPT last year, which unsurprisingly, led to uproar in the chamber and Mayor John Pratt ruling him out of order.
The only other point of interest in the rest of the meeting, aside from the vote which confirmed the 2.5% increase, was that pact member Seamus O’Donnell voted against his colleagues, saying afterwards that he “votes the way he wants, not how people tell him to vote”.
The pact was one less man, but it didn’t matter as the 2.5% increase passed with three votes to spare.
31 of the 32 members of council were present for the meeting, with Cllr Lola O’Sullivan (FG) the only one not in attendance.