Ministers decided against major changes in the local property tax regime because of an “uneven pace of increase” in home values, documents show.
A note sent in March to Minister for Finance Paschal Donohoe detailed a conversation he had with Taoiseach Leo Varadkar and Minister for Housing, Planning and Local Government Eoghan Murphy about the tax.
It states that during the discussion, Ministers discussed how it was “imperative” to keep the tax stable and also noted the complexity of ensuring “moderate” increases across the country.
“A discussion you had on 20 February with the Taoiseach, the Minister for HPLG, the attorney general, was informed by estimates of the impacts of local property tax liabilities of liable persons under a number of scenarios that have been discussed over the last number of weeks...
“The discussion noted the imperative of achieving relative stability in local property tax liabilities and inter alia the significant challenges arising in that regard from the uneven pace and rate of increase in residential property values throughout the country since the first valuation date of 1 May 2013.”
Freedom of Information
The note, released under Freedom of Information laws, adds that “these factors add complexity to the task of attaining moderate and affordable adjustments to the tax in an even manner across the country within the local property tax design parameters.
“It was noted that simplicity was a key factor in the successful implementation of the local property tax and that it was important to try to maintain this feature for taxpayers.”
A freeze on re-evaluations until November 2020 was announced in April.
Mr Donohoe said last month that he was planning for “modest” increases in property tax when the deadline for re-evaluating how much householders pay comes around next year.
Mr Donohoe said any changes would be “affordable” but the “progressivity” of the tax would be upheld.
It comes after an ESRI report warned that the Government ought to take some heat out of the economy by raising taxes, particularly carbon tax and property tax.
“Given the expected increase in capital expenditure over the short to medium term, it may be advisable to run an explicitly counter-cyclical fiscal policy and instigate a mildly contractionary budget.
“Taxation increases in the area of carbon taxes or residential property taxes could be used to reduce some of the demand-side pressures which are now evident in the domestic economy.”
