Oireachtas committee unlikely to approve radical shift on property tax

Members of an Oireachtas committee reviewing local property tax (LPT) are unlikely to agree to a radical shift in the basis on which the charge is paid.

Over the weekend, Minister for Housing Eoghan Murphy suggested he was in favour of changing the current charging system, where the tax is based on the market value of the house.

Mr Murphy has responsibility for the LPT, in conjunction with Minister for Finance Paschal Donohoe.

Mr Murphy has argued for a system where the calculation was not based on the market value of the house. It is understood he favours introducing other elements into the calculation basis, including site value or the size of the house. Minister for Transport Shane Ross has also described the current charging basis as “perverse”.

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The Budgetary Oversight Committee has been examining the tax since December. It has met the Revenue and is also expected to get a briefing from Department of Finance officials later this week ahead of meeting with Mr Donohoe.

While there is general agreement that there must be change, some members have privately said it would be be difficult for the committee’s report to move away radically from the current arrangement. One member said if the tax was based on house size, the majority of people in rural Ireland might end up paying more property tax than people who live in the wealthier suburbs of Dublin.

“The argument would be you are replacing one injustice with another. The problem is that no matter what basis you use, there will always be losers and anomalies.”

Urban areas

At present, the house value on which the tax is levied has remained frozen since 2013, but is due for revision in 2019. The difficulty is that house prices have increased enormously in Dublin and in other urban areas.

Some households’ liability will increase by at least three bands in some cases, according to Fine Gael TD Colm Brophy, who is chair of the committee.

“If the real [2019] values were to be used,” said Mr Brophy, “the impact in Dublin, in particular, will be enormous.” He said families living in three-bedroom semi-detached houses across Dublin will see their tax liability grow from €400 to nearly €1,000.

He said while there was recognition there must be change, it was too early to say what changes the committee will propose.

Hybrid system

The likelihood of a hybrid system mixing market value with the size of the house increased when the Fianna Fáil spokesman on housing, Barry Cowen, said there might be merit in a system that included the “square footage and site tax elements”.

Sinn Féin spokesman Eoin Ó Broin reiterated his party’s opposition to the tax, saying its first objective was to abolish it. “If people want to look at alternative ways of funding local government, we are willing to talk about them. The fact is that local authorities get less money [from LPT] than they did on the grant system [that preceded it],” he said.