Some councils may be allowed reduce property tax by up to 15%

Almost one-third of county councils are in a position to cut the property tax by the full 15 per cent allowable next year and still be in a position to break even financially, according to official Government figures.

A further two – Cork city and Kerry – can cut the tax by a smaller amount and still be able to fund their activities.

The remaining 19 county councils will receive €100 million through an “equalisation fund” of redistributed money from the wealthier areas which take in more property tax.

Those in a position to reduce the tax by 15 per cent and still break even are: Clare; Cork County; Dún Laoghaire-Rathdown; Dublin city; Fingal; Galway city; Kildare; Meath; south Dublin and Wicklow.

Councils can retain 80 per cent of the property tax raised in their areas, with the remaining 20 per cent given to the equalisation fund.

Tax windfalls

All councils can reduce or increase their rate of tax by as much as 15 per cent but those without property tax windfalls would have to reduce spending elsewhere, making it unlikely that they would vote for a reduction.

Councils have until the end of this month to inform the Revenue Commissioners of their intentions for next year.

Dún Laoghaire-Rathdown and Fingal have already voted for a full 15 per cent reduction.

Central government funding to wealthier counties will also be cut by about €150 million in total, but Minister for the Environment Alan Kelly said no council will be worse off than they were last year.

It is understood that letters were sent to local authorities last night informing them of how much their individual reductions will be.

Roads and housing

Funding from central Government is usually used to pay for roads, housing and other one-off spending projects, and some councils will collect more through the property tax than was provided to them by central Government.

Mr Kelly said such local authorities will be able to keep some of this surplus to spend as they wish and the Minister’s spokesman said the cuts in central Government funds would be compensated by increased receipts in property tax.

However, Opposition TDs criticised this approach.

Independent Kildare North TD Catherine Murphy accused the Government of misleading people "into believing that the introduction of property tax would result in increased and improved services at local level".

“That was never going to be the case when at the same time they were decimating the traditional funding stream to local authorities.

“The property tax was introduced as nothing more than a vehicle to replace what they were already taking out of the funding for local services; it was never going to add to it.”

Fianna Fáil's Barry Cowen said the "public have been hoodwinked by the Government into paying for a tax that will not benefit their local communities in any meaningful way".

Sinn Féin's Pearse Doherty said voters have been "duped".

Mr Kelly said the “top ups” from the “equalisation fund” are necessary “to create a balanced system of funding across local authorities”.

Donegal County Council will be the highest beneficiary of a €13.9 million transfer from counties in Dublin, the commuter belts and elsewhere, with Tipperary following closely behind with a €12.9 million transfer.

Others who will receive funds include Galway County (€500,000); Limerick (€1.67 million) and Monaghan (€10.25 million).