Local Property Tax funding ‘detrimental’ to Dublin, claims city council finance chief

Local Property Tax (LPT) funding for Dublin is inadequate, arbitrary and “terribly detrimental” to the capital, Dublin City Council’s head of finance has said.

The tax, paid annually by homeowners, has raised expectations that residents would get more and better services, Kathy Quinn told the council’s finance committee.

However, she said the council was worse off financially than before the LPT was introduced.

‘General purpose grant’

Ms Quinn was briefing the committee on Thursday on the council’s submission to the Government’s review on baseline funding for local authorities. The LPT was introduced in 2013 and replaced funding provided by government, particularly the “general purpose grant” made up of motor tax receipts.

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A baseline was set by the Government as the amount of funding each local authority needed. If the LPT did not meet that level, the money would be topped up from a central pot. The year taken to establish this baseline was 2014.

“The 2014 baseline which says the Dublin City Council needs X level of funding is arbitrary and we don’t understand how it was determined,” said Ms Quinn.

The choice of 2014, she said, took no account of whether that was a “typical year” for any local authority or the funding needs of a council in any given year when costs might rise.

“When [funding] is based on a situation where it simply isn’t possible to understand how it was calculated, given what we would need to have, it really means that there is no understanding of what is going on. There’s no context of how the 2014 baseline was arrived at,” she said. “It has been terribly detrimental to Dublin City Council the use of that baseline figure.”

Equalisation measure

Since 2013, 20 per cent of LPT collected in the city had to be paid into a central pot so it could be reallocated to poorer local authorities, to maintain their baseline. Most of these were in more rural areas.

However, from this year 100 per cent of the tax will be retained in the council area where it is collected, with the Government topping up counties with low LPT receipts.

The council had expected the removal of this equalisation measure would bolster its coffers, but instead other sources of Government funding were cut, said Ms Quinn.

“The equalisation fund was removed and we all thought we’d get around €16-€20 million more, that didn’t happen because it was just substituted for other grants. So the Government funding model hasn’t generated the funds it was expected to and, I think, what citizens felt they would see in uplift in services.”

Of a potential €96 million in LPT receipts for 2023, the council has discretion in the use of just €7 million, with the rest directed by central Government.

“People in Dublin City Council pay their LPT and think this is going to provide a whole heap of new services. There certainly would have been a sense when LPT was introduced that it was going to be extra money, but in overall terms there is less than there was before in the general purpose grants.”

The Government needed to remove the 2014 baseline calculation which left funding “frozen at a point in time with no consideration of rising costs of other expenditure pressures” and needed to fund the city at a level, consistent with its population growth and its role as the “driver of the national economy”, she said.