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Gilmore Backs Property Tax Rate Cut

by Jason Gorringe,, London

05 February 2014

Ireland's Deputy Prime Minister has said that he would support any councils wishing to cut the controversial Local Property Tax (LPT) from next year.

The Government was forced to implement a comprehensive property tax regime as one of the conditions of its European Union/International Monetary Fund bailout program.

The LPT is charged at 0.18 percent of the market value of properties worth up to EUR1m (USD1.35m), 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 0.18 percent to the mid-point of the relevant band.

The 0.18 percent rate is fixed for the lifetime of the current Government, but a "local decision factor," allowing local authorities to vary the rate by up to 15 percent, will apply from 2015.

Eamon Gilmore this week told RTE news that he would back councils intending to vary the rate in "the larger urban areas," where "property values are high, where property tax is high, where housing density is high and therefore where the income in the local authority is high."

Local elections are scheduled for May. Gilmore anticipates that Labour victories would lead to Labour-led authorities pursuing this policy.

Reacting to Gilmore's comments, Leo Varadkar – a member of the Fine Gael party, Labour's coalition partner – agreed that it was possible for local rate changes to take place. He did however stress to RTE that councils would "need to commit to lower spending" if they hoped to make a rate cut "credible."

TAGS: tax | property tax | revenue guidance | International Monetary Fund (IMF) | ministry of finance | tax authority | tax rates | revenue statistics | tax reform | European Union (EU) | Europe

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