Cut to property tax shelved on legal advice

Clare Fianna Fáil councillors are up in arms over the distribution of the Local Property Tax (LPT), following claims that €5.6 million will be used to “bail out” other “inefficient” local authorities. Councillors have criticised the transfer of over €2m from Clare County Council’s 2015 LPT allocation of €10.406m to the national equalisation fund, which, in turn, will be distributed to local authorities who don’t have a high yield from this tax. The council was urged by Councillor Cathal Crowe to consider taking a legal challenge against the proposed redistribution of another €3.597m, to self-fund local housing and roads services, at a meeting this week. Councillor Crowe felt it was important the council took a stand if the Government continue to implement its proposed “unfair distribution”, which he claimed penalises the council for being “the best in the class”, while other authorities had adopted a more “casual approach”. The political row over where the proceeds of the LPT will be spent in Clare continued later in the week as Labour Deputy, Michael McNamara dismissed some of the Fianna Fáil claims as “ridiculous”. Clare councillors deferred a decision on a proposed 15% cut on property tax for householders in the county until later this month, following legal advice. At a meeting on Monday evening, Fianna Fáil councillors Tom McNamara and Richard Nagle proposed the council take a decision to implement this cut and give “a much-needed break to Clare people, who are being crippled by austerity tax hikes”. Councillor McNamara has warned that over half of the €10.4m projected receipts from the LPT would effectively be leaving the council coffers next year. He noted that the Government had promoted the LPT on the basis that most of the proceeds would be spent on improving services, such as footpaths, public lighting and sewerage, and stressed that funding for roads should be provided by Government out of the standard roads budget and not from the LPT. Councillor PJ Kelly claimed the Government is effectively “penalising” Clare through the equalisation fund and “rewarding inefficient councils” for reducing commercial rates in recent years, while Clare County Council had adopted “a more prudent approach” to maintain existing services. Councillor Richard Nagle claimed another €3.597m would have to be funded from the LPT receipts, instead of from central Government. Deputy McNamara, meanwhile, said since Fianna Fáil abolished domestic rates in 1977, local authorities were reduced to adopting a “begging bowl” approach for funding from central government.

The Labour Deputy said money was always going to be diverted from the LPT to the national equalisation fund, to assist local authorities, like Leitrim, which don’t have a high property tax base. Deputy McNamara said the introduction of the LPT was signed off by the previous Fianna Fáil-led Government, under the EU-IMF bailout agreement. Asked if there would be a net benefit for Clare County Council in terms of funding, Deputy McNamara said this would depend on whether or not local councillors decided to increase or decrease the LPT. He claimed it was always the case that the LPT would be used to help self-fund what he described as local authority services, such as roads and housing. Chief executive officer, Tom Coughlan, informed members that the authority had obtained legal advice that it couldn’t take a decision to decrease or increase the LPT at the meeting. Councillor James Breen asked Mr Coughlan, if councillors decided at the meeting to vary the rate of property tax, would he implement this decision. Mr Coughlan replied he had a legal duty to implement any decision taken by councillors, once taken in accordance with the law.

However, he stressed he couldn’t implement any decision taken at last Monday’s meeting because it wouldn’t meet legal requirements. Instead, he pledged the matter would be discussed with members of the corporate policy group, before it would be put forward for discussion at a special meeting later this month, possibly on September 30, as the Revenue Commisioners have to be informed about the council’s decision before the end of the month. Councillor Pat Daly said there was “huge opposition” to the new property tax and water charges and felt any reduction would be welcomed by people struggling to pay austerity taxes. Clare County Council is one of the local authorities that has the discretion to reduce the property tax by 15% next year. Dan Danaher