Agenda Item 13 MEETING OF DÚN LAOGHAIRE-RATHDOWN COUNTY COUNCIL 11 DECEMBER 2017 REPORT ON LOCAL PROPERTY TAX INCOME The following motion was agreed at the Council meeting held on 11 November 2017: “To ask the Chief Executive to provide a report on the additional revenue that could have accrued to DLRCOCO if the amount paid to the equalisation fund was calculated of the total LPT monies to be collected net of the percentage reduction adopted by the Council for the following years 20104, 20105, 2016 & 2017.” Report: The legislative provisions in relation to Local Property Tax (LPT) are contained in the Finance (Local Property Tax) Act 2012, Finance (Local Property Tax) (Amendment) Act 2013 & the Finance (Local Property Tax) Regulations 2013. Section 157 of the Finance (Local Property Tax) Act 2012 provides that “In each financial year commencing in the year 2014, the Minister shall pay into the Local Government Fund an amount equivalent to the local property tax (including any interest paid thereon) paid into the Central Fund during that year”. Disbursements from the local government fund to individual Local Authorities are determined by the Department of Housing, Planning & Local Government in accordance with Section 6 of the Local Government Fund Act 1998. Prior to the introduction of LPT local authorities received discretionary funding from the Local Government Fund (LGF) to supplement revenue account income. At the time LGF income was a significant element of funding particularly in rural counties with a low commercial rates base. LPT was first introduced in July 2013 but normal funding arrangements for local authorities continued to apply until 2015. Irish Water was established on 1/1/2014 and that year expenditure associated with the provision of water services was transferred from local authorities’ budgets to Irish Water with a corresponding reduction in LGF income. Since 2015 local authorities retain 80% of the Local Property Tax receipts collected in their area and the remaining 20% of the amount collected is transferred to an equalisation fund to ensure that no local authority is worse off as a result of the local retention of LPT compared to the Local Government Fund allocation received by them in 2014. Where the amount of LPT income collected exceeds the LGF allocation in 2014 a further 20%, circa €10.5m, of the LPT income collected is allocated as additional discretionary income. If the basic rate is varied downwards by the Council the cost of the variation is funded from this discretionary element of the allocation. DLR’s local government fund allocation in 2014 was €5.7m but the LPT income collected amounts to circa €53m. Accordingly 20% of the amount collected in DLR goes to the equalisation fund, a further 20% is allocated as additional discretionary income and the remainder replaces various revenue and capital grants received previously, including the LGF.
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Table 1 below sets out DLR’s LPT allocation for 2018 where the amount transferred to the equalisation fund is 20% of the total LPT income to be collected.
Table 1 Equalisation pre 15% reduction DLR LPT allocation
€
LPT projected income 2018
51,824,546
Equalisation (20%)
10,364,909
DLR allocation
41,459,637
Table 2 shows the LPT allocation that would have been received if the amount transferred to the equalisation fund was net of the 15% reduction. In this case an additional €1,554,736 would have been available. Table 2
Equalisation Post 15% reduction LPT projected income 2018 Cost of 15% reduction
€ 51,824,546 7,773,682
LPT Income net of 15% reduction Post reduction equalisation
44,050,864 8,810,173
DLRallocation post reduction
43,014,373
Difference in income
1,554,736
Table 3 sets out the amount of additional income that would have accrued to DLRCOCO for the years 2015-2017 if the amount paid to the equalisation fund was calculated net of the 15% reduction.
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Year
LPT income €
20% Equalisation fund/ additional discretionary income €
Potential gain if transfer to Cost of 15% equalisation was reduction net of reduction € €
2017
51,652,059
10,330,412
7,747,809
1,549,562
2016
50,736,133
10,147,227
7,610,420
1,522,084
2015
53,472,548
10,694,510
8,020,882
1,604,176
155,860,740
31,172,148
23,379,111
4,675,822
Cumulative Total
It is however important to note that even if additional LPT income became available it may not be allocated as additional discretionary revenue income but could be used to substitute current revenue or capital exchequer grants. If so there would be no increase in the amount of revenue account funding available and there would be no gain to the Council from a budgetary perspective. Owner:
Helena Cunningham Director of Finance & Economic Development
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