The Irish Government has introduced legislation to postpone the revaluation date for the Local Property Tax (LPT) from 2016 to 2019.
The Finance Department said that the postponement means that homeowners will not be faced with significant increases in their LPT in 2017 as a result of rising property values. It will also allow sufficient time for the Government to consider in full the other recommendations made in Dr Don Thornhill’s recent review of the LPT system.
Thornhill’s report on the LPT was published on Budget Day in October. Thornhill was asked to examine the overall yield from LPT and its contribution to total tax revenue on an ongoing basis. He was also asked to analyze the impact of recent residential property price developments on revenues, and consider improvements to ensure that LPT collections remain stable.
Thornhill recommended that a revised system of assessing LPT liabilities be introduced and that the next revaluation date be delayed from November 2016 to either November 2018 or November 2019. He suggested that this be accompanied by a switch to a five-year valuation period, in place of the three-year system currently used.
Thornhill also argued that the Government should consider moving to a system under which local authorities retain 100 percent of the LPT revenues raised in their areas, and that LPT be redesignated as a Local Council Tax, to emphasize that it is a tax raised to pay for local council services.
The LPT is charged at 0.18 percent of the market value of properties worth up to EUR1m (USD1.1m), and at 0.25 percent on any excess value over EUR1m. Property values are organized into a number of bands, and the tax liability is calculated by applying the LPT rate to the midpoint of the relevant band. A “local decision factor” allows local authorities to vary the rate by up to 15 percent.
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