Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy argued that we need to give consideration to ability to pay in terms of the future LPT. I can understand the attraction of that point and why the Deputy feels that way. Legislating for that and changing the LPT to do that would have massive consequences in terms of what this tax would look like in the future and the revenue it could raise. This is one of the issues we need to be careful about as we look at changing the revaluation and the legislation we need to make that happen.

Regarding the Deputy's second point about the effect on local authorities that cut their LPT rate, what the Deputy said is correct. If they cut the rate and there is a gap in revenues as a result, that gap is not filled. Conversely, were we to decide that we would fill that gap, we could perversely create an incentive for the rate to be reduced even further. That is why I believe there is merit in ensuring that in the future, if local authorities decide to cut their LPT rate, they can only do so if they feel they have the resources in place to ensure that it is affordable for them.

However, overall, the point made by the Deputy regarding the connection between paying a tax locally and seeing a local service improve is a fair one. I issued a press statement on the day because it was only touched on in this report because the report looked at how we raise the tax as opposed to how we spend it. That is something on which we need to make progress. To get a sense of the figures against that, we retain around €100 million per year in this tax so making progress towards that objective of what is paid locally being used to pay for a local service without penalising another local authority elsewhere does have significant financial consequences. Over time, we will be able to do a better job on it than we are doing at the moment.