Éamon Ó Cuív (Galway West, Fianna Fail)
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620. To ask the Minister for Housing, Planning, and Local Government if it is planned to reform the way central government supports local government as a result of the decision to allow local authorities to retain 100% of the revenue from the local property tax; if the new funding mechanism for local authorities will contain open, fair and transparent measures to allocate funding to those authorities that will need funding; and if he will make a statement on the matter. [31472/21]

Éamon Ó Cuív (Galway West, Fianna Fail)
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621. To ask the Minister for Housing, Planning, and Local Government if he will be seeking extra funding to fund local authorities in 2022 in view of the recent decisions on the retention by local authorities to the full amount of the local property tax they collect; and if he will make a statement on the matter. [31473/21]

Peter Burke (Longford-Westmeath, Fine Gael)
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I propose to take Questions Nos. 620 and 621 together.

The funding system for local authorities is complex, with authorities deriving their income from a variety of sources including commercial rates, charges for goods and services and funding from Central Government. The Government remains committed to ensuring that the local government sector retains a sustainable and stable source of funding from Local Property Tax (LPT), distributed to local authorities via the Local Government Fund, to support the delivery of local authority services.

Local retention of LPT began in 2015 and since then the overall principles and allocation methodology have broadly remained the same. 80% of LPT is retained in the area it is collected, with the other 20% supporting equalisation for local authorities with LPT bases lower than their funding baseline.

The Programme for Government 'Our Shared Future', commits to bringing forward LPT reforms. These reforms will involve bringing new homes, which are currently exempt from LPT, into the taxation system as well as providing for all money collected locally to be retained within the county. This will also be done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer, as is currently the case.

My colleague, the Minister for Finance, recently published the Heads of the Finance (Local Property Tax) (Amendment) Bill 2021. The Bill will give effect to a package of measures in line with the Programme for Government to address the future of the LPT. Minister Donohue also signalled the Government’s intent to move to 100% local retention from 2023. Any changes to the allocation process may be considered in that context.

The funding for all local authorities will be kept under review as part of the normal Estimates process and in the context of the aforementioned LPT revaluation process.