No Property Tax cut for Galway householders

Both Galway City and County Councils are unlikely to have any windfall to return to homeowners when the property tax goes directly into local authority coffers next year.

There have been reports nationally that Galway City Council could benefit financially once the Local Property Tax (LPT) replaces central Government funding and other grants from 2015.

Under the legislation, councillors have the power to reduce the LPT by up to 15% in the event the local authority has a sufficient surplus generated by the tax.

Councils which are likely to find itself in that position are large urban centres with big population centres where homeowners have properties with higher values. Galway City Council was one of an estimated twelve council areas tipped to have a surplus once the change is enacted.

A motion from Sinn Fein seeking a 15% decrease in the LPT next year was tabled at the last City Hall meeting but it was not debated as a consultation process about whether such a decrease was warranted had already begun.

The Council has called for public submissions by August 18 on the potential effects of varying the basic rate of LPT on businesses, individuals and on local authority services. The matter will then be decided by councillors at the September meeting.

Head of Finance in the City Council, Edel McCormack, said based on the information the Council had received from the Department, its budget would remain the same.

“If we get 80% of the LPT as indicated by Government, it will just replace the Local Government Fund and other grants, it will have no positive or negative effect, it will be budget neutral,” she stated.

County Council cathaoirleach Mary Hoade said the process was flawed as the council had to notify the Revenue Commissioners whether it intended to vary the LPT without knowing how much funding it would receive from the Government.

“At the last corporate policy meeting the head of finance couldn’t say what we were going to get. We don’t know what the local government fund is going to be, yet we have to tell Revenue if we’re going to put it up or down. We’re being asked to do something in advance of knowing what the situation is.”

The Minister for Public Expenditure Brendan Howlin this week said there were about a dozen councils which would have a surplus in funding once the bulk of the property tax goes directly into local authority coffers.

While he declined to name the councils, he was basing his predictions on figures compiled by the Government which compare every council’s revenue this year with the funding they will receive when the local property tax goes local next year.

The remaining 20% will go into an equalisation fund to be distributed among the less well-off councils.

City Labour Councillor Billy Cameron said a 15% decrease in the LPT  in this December’s budget was highly unlikely given its impact on a very tight financial situation.

“There is not a councillor presently sitting on Galway City Council who would not wish to implement a cut of !5% but the reality is that all cuts and increases of any sort must be costed and what their implications would be on the overall budget,” he stated.

“The Director of Finance has informed me that the estimated financial implications of a variation to the Local Property Tax for Galway City Council by +/- 15% would be in the region of €1.2 million.“

“We have a City budget of €80m and as Councillors last year we made adjustments in the region of a quarter of a million. Adjusting a budget by €1.2m would be a colossal move which could only be recouped by increases in commercial rates or a reduction in services, decreasing the roads budget or decreasing arts, sports and amenity grants.”

He added that a case could be made for a 3% decrease over the next five years but 15% in one budget will be a bridge too far for the majority of councillors.