Damien English (Meath West, Fine Gael) | Oireachtas source

Local retention of local property tax, LPT, commenced in 2015 and is now established as an alternative and essential source of funding for the local government sector, thereby reducing reliance on central funding. The Government decided that 80% of the estimated LPT liability in each local authority area for a given year is retained in that area to fund public services, notwithstanding any local variation decisions. The remaining 20% of LPT is redistributed to provide equalisation funding to those local authorities that have lower property tax bases due to the variance in property values and density across the State. This reflects the fact that local authorities vary significantly in terms of size, population, public service demands, infrastructure and income sources.

In accordance with decisions taken by the Government regarding the distribution of local property tax, every local authority has a minimum level of funding available to it known as the baseline. There are variances across the country in terms of LPT levels but it is important that all local authorities receive at least this baseline level of funding to ensure they can deliver services. Following consideration by my Department, the baseline was last revised in respect of the 2017 local property tax allocations. For 2017 onwards, an adjustment was made to the baseline of each local authority to include an additional amount equivalent to the pension-related deduction, PRD, income retained by local authorities in 2014. This administrative arrangement was designed to reduce the risk to local government funding that would otherwise arise from declining PRD income from 2016 onwards. Therefore, the baseline is currently linked to previous general purpose grant amounts and the level of pension-related deductions retained by local authorities in 2014.

The Department of Finance has overall responsibility for LPT policy and accordingly, questions around such policies are primarily a matter for my colleague, the Minister for Finance. My Department remains focused on the resource needs of all local authorities. The issue of baselines is one that is raised a great deal with Department officials when they visit local authorities. Most local authorities are happy with the change made in regard to the pension-related deduction. We have given a commitment to analyse ongoing costs and funding issues for local authorities into the future as more money becomes available through our current and capital budgets.

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