Edward Timmins (Wicklow, Fine Gael)
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96. To ask the Minister for Finance if he will review the operation of property tax. [39675/25]

Edward Timmins (Wicklow, Fine Gael)
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I welcome some aspects of the revised calculation of property tax and the calculation of the amount retained by counties. I recognise that the expected average increase of 5% is way below the inflation rate of 16.7% over the past four years. However, more needs to be done to make it a more equitable tax.

In particular, some counties do not retain all of the tax collected in their county.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputy. The answer I have to hand goes through the structure of the local property tax, which Deputy Timmins already knows. I will not take him through that. The issue to which he referred is about the interplay between the amount of revenue a local authority raises in its own jurisdiction and the equalisation fund. I have tried in the various revaluations in which I have been involved - I have now done two - to get to a place where local authorities control and keep more of the revenue they raise. I know there are still policy issues in this regard and areas in which we can improve. I am sure the Deputy will give me his view on those now.

Edward Timmins (Wicklow, Fine Gael)
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I thank the Minister. In my county, Wicklow, €3 million of the €23 million tax raised will not be kept locally next year. This is an improvement on the €5 million in 2025 but it needs to be eliminated. I do not suggest it be taken from the other counties which receive more than what is collected but that it ultimately comes from Exchequer funding. Two aspects of the system need to be changed. The first is the baseline figure, which is used to deprive local authorities of the tax raised in their counties. This is based on a complex formula with very low weighting given to population. Counties with half or less of the population of Wicklow with similar areas have similar baselines. This makes no sense and needs to be scrapped. Second is the local property tax surplus calculation. This percentage is set to ensure the balance is calculated to reduce the amount a council can retain. It is an arbitrary percentage with no basis. Both of these complex formulae need to be scrapped to allow councils to retain all their property tax.

Paschal Donohoe (Dublin Central, Fine Gael)
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I understand the Deputy's point. In between the two complex formulae and the spreadsheet I see, which has them on it - I am sure the Deputy is familiar with it - there are a number of local authorities like his own that believe they do not get to keep all of which they raise. The issue, which the Deputy acknowledges in his question, is that if we were to move to a system where all of what a county raises is kept within the local authority raising it, some local authorities would need additional support and intervention directly from the Exchequer to ensure funding they did not lose the funding they had. That would carry a consequence because it would mean funding that we are currently using in local government would have to be moved into that use. I have tried through the two revaluations to make a difference to the issue, which the Deputy acknowledged.

Edward Timmins (Wicklow, Fine Gael)
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The legislation states the property tax must be reset to the base rate every year. This means if a council has a rate above the base rate, for example, 6%, as it is in Wicklow, it has to restate every year the rate is increasing whereas in actual fact the rate is not increasing. Could the legislation be changed to eliminate the requirement to return to the base rate each year and have the actual tax as the starting point? A positive development is the use of the discretionary fund to the municipal district. This allows a greater say over spending locally. It is something I promoted when I was chairman of Wicklow County Council. Spending in Ireland is too centralised and there is much benefit in spending being done by people close to the issues, namely, local councillors and local officials. I ask that the amount of property tax allowed for the discretionary fund be increased.

Paschal Donohoe (Dublin Central, Fine Gael)
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On the second matter, I am happy to raise it with the Minister for local government, Deputy Browne, and his colleague, the Minister of State, Deputy Cummins, who is also involved in this issue with me. On the first matter, I examined that issue and inquired into it. I was definitively told I could not make that change. The reason is the budget cycle is annual and the budget cycle here is also annual. When I referred to the annual budget cycle in the first part of my answer, I spoke about the budget cycle within the local authority. For that reason, I was told, the decision in relation to the base rate has to be taken each year when budget decisions are made. I pressed that issue because I am aware of the challenges there can be around making that decision. I am afraid that on that issue, I have to give the Deputy a clear answer but not the one he wants.