Shay Brennan Outlines Fairness of Local Property Tax Bill

I am grateful for the opportunity to address the House today on the Finance Local Property Tax Amendment Bill 2025. As a representative of Dublin Redown, I am acutely aware of the importance of the local property tax, both as a source of funding for our local authority and as a topic of real concern for homeowners and communities across the country. I want to set out clearly why this Bill is not only necessary but why it is fair, balanced and in the best interest of our citizens, our local authorities and the future sustainability of our public services. I want to begin by recalling why the local property tax was introduced in the first place. The local property tax established in 2013 was a critical reform in the wake of the financial crisis. It was designed to broaden our tax base, to provide a stable and predictable source of funding for local government and to reduce our reliance on volatile transaction-based taxes, such as stamp duty. Since its inception, the LPT has delivered on these objectives. It has become the cornerstone of local government funding, supporting the delivery of essential services, services that every citizen relies upon every day. From the maintenance of our parks and green spaces to the upkeep of our roads, the provision of libraries, community centres and local amenities, the LPT underpins the very fabric of local life. But perhaps the most important thing is that the LPT is a tax that is retained locally. The revenue raised in each local authority area is spent almost primarily in that area, ensuring that the communities see a direct return for their contribution. This principle of local accountability and local benefit is at the heart of the LPT system, and it is one that this bill seeks to strengthen. However, as with any tax, the LPT must evolve to reflect changing circumstances. We cannot ignore the reality that property prices have risen significantly since the last revaluation in 2021. According to the Central Statistics Office, residential property prices nationally have increased by approximately 24 per cent over the last four years. In some areas, particularly outside Dublin, the increases have been even more pronounced. Without reform, there would have been a sharp and sudden increase in LPT liabilities for many homeowners, an outcome that would be neither fair nor sustainable. The government has listened to these concerns, has engaged with stakeholders, with local authorities and with the public to ensure that the system remains balanced, equitable and fit for purpose. The Finance Bill 2025 addresses these challenges head-on. The Bill contains a number of key provisions, each designed to ensure that the local property tax remains fair, proportionate and sustainable. First and foremost, the Bill widens the valuation bands by 20 per cent. This means that the bands within which properties are valued for LPT purposes will be broader, allowing many homeowners to remain in their current bands despite increases in the property values. This is a crucial intervention. It ensures that the vast majority of homeowners, an estimated 96 per cent, will not see their LPT liability jump by more than one band, and many will see no change at all. To put this in context, while property prices have risen by about 24 per cent, the widening of the bands combined with a new base rate of 0.0906 per cent means that the average increase in LPT for most homeowners will be limited to less than 5 per cent. For properties valued under 1.26 million, base LPT charges will increase by between 5 and 6 per cent. This is a modest adjustment, one that is in line with property value growth and far less than the headline rate of inflation. For higher value properties, the Bill ensures that LPT charges are proportionate to their market value. Properties valued over 2.1 million will be charged on their actual value with progressive rates applied to the different proportions of the property value. This progressive element is fundamental to the fairness of the system. It ensures that those who own more valuable properties contribute accordingly, while protecting those on lower and middle incomes from excessive increases. Another important feature of the Bill is the setting of the valuation period to five years, from 2026 to 2030. This provides certainty and stability for property owners, allowing them to plan their finances with a certain degree of confidence. The next re-evaluation will take place on the 1st of November, 2030, maintaining a regular cycle that reflects market conditions without causing undue disruption. The Bill also addresses affordability concerns by indexing the income thresholds for LPT deferral. This means that those on lower incomes or with limited means will continue to have access to deferral options that reflect current economic realities. The thresholds have been updated to keep pace with inflation, wage growth and increases in state payments since 2021. This is a vital safeguard, ensuring that the LPT does not become an undue burden on the most vulnerable in our society. Finally, the Bill empowers local authorities by allowing them to vary the LPT rate upwards by up to 25%, giving them greater flexibility to respond to local needs and priorities. The downward variation remains capped at 15%. Importantly, any additional revenue generated from these changes will be retained by the local authorities, ensuring that the benefits of this tax reform are directly felt in local communities through improved services and infrastructure. As a TD for Dublin Red Down, I want to speak directly to the impact of these changes on my own constituency. Dublin Red Down is a vibrant, diverse community, home to families, young professionals, retirees and people from all walks of life. It is an area with a strong sense of community, but also one that faces real challenges, whether in housing, transport or the provision of local amenities. The LPT has played a crucial role in supporting local services in Dublin Red Down. It has funded the maintenance and enhancement of our parks and playgrounds, supported local sports clubs and enabled the delivery of community initiatives that bring people together. It has helped to maintain our roads, improve public lighting and support the work of our libraries and community centres. I have spoken to many constituents who recognise the value of these services, but who are also concerned about the potential impact of rising property prices on their LPT liability. This Bill responds directly to those concerns. By widening the valuation bands and limiting the average increase to less than 5%, we are ensuring that the vast majority of homeowners in Dublin Red Down would see only a modest adjustment to their LPT bill, one that is fair, proportionate and manageable. For those on lower incomes, the updated deferral thresholds provide a vital safety net. No one should be forced to choose between paying the LPT and meeting their basic needs. This Government is committed to protecting the most vulnerable and this Bill delivers on that commitment. I am aware that some of this House, and indeed in the wider public, have raised concerns about the LPT. Some argue that it is an unfair burden on homeowners or that it fails to take account of ability to pay. Others suggest that it should be abolished altogether or replaced with an entirely different system. Let me address these concerns directly. Firstly, on the question of fairness. The LPT is by design a progressive tax. Those with more valuable properties pay more, while those on lower incomes have access to deferral options. The widening of the bans and the updating of deferral thresholds in this Bill further enhance the fairness of this system. The alternative, relying on transaction taxes or general taxation, would be less predictable, less stable and ultimately less fair. Secondly, on the ability to pay. The LPT is not simply a tax on homeownership, but a contribution to the services that make our communities liveable. The updated deferral thresholds ensure that those who genuinely cannot afford to pay are protected. The vast majority of homeowners will see only a modest increase, and for many, the benefits of improved local services will far outweigh that cost. Thirdly, on the question of abolition, to abolish the LPT would be to undermine the financial foundation of our local authorities. It would mean less funding for parks, libraries, roads and community services. It would mean greater reliance on central government funding, reducing local accountability and local decision-making. It would be a step backwards, not forwards. Finally, on alternatives, someone suggested that the LPT should be replaced with a site value tax or another form of property taxation. While there is merit in considering the long-term evolution of our tax system, the reality is that the LPT is a well-established, well-understood and administratively efficient system. The changes proposed in this bill build on that foundation, making the system fairer and more sustainable for the future. It is important to situate this bill within the broader context of our public finances. Ireland has made significant progress in recent years in restoring fiscal sustainability, reducing our debt burden and investing in public services. The LPT is a key part of that progress. It provides a stable, predictable source of revenue that supports local initiatives and reduces our resilience on more volatile revenue streams. In a world of increasing uncertainty, whether due to global economic shocks, climate change or demographic change, it is more important than ever that we have a broad, stable tax base. The LPT is an essential part of that base, and this bill ensures that it remains fit for purpose in the years ahead. This bill also delivers on the commitments made in the programme for government. It was promised to ensure fairness and stability in local property tax payments, to retain revenue locally and to protect those on lower incomes. This bill fulfils all of those promises. It is a balanced, responsible and forward-looking piece of legislation that will serve our communities well. In conclusion, I want to return to the fundamental principles that underpin this bill – fairness, stability and local empowerment. In fairness, by widening the valuation bands, updating deferral thresholds and applying progressive rates to higher-value properties, we are ensuring that the local property tax remains fair and proportionate. Under stability, by setting a five-year valuation period and providing certainty for homeowners, we are ensuring that the system is stable and predictable. Under local empowerment, by allowing local authorities to vary the local property tax rate and retain additional revenue, we are strengthening local accountability and ensuring that communities see a direct return for their contribution. I urge all deputies to support this bill. It is the right thing to do for our homeowners, for our local authorities and for the future of our public services. It is a bill that balances the needs of today with the challenges of tomorrow. It is a bill that delivers for the people of Dublin Rat Down and communities right across Ireland. Let's work together to ensure that the LPT remains a fair, sustainable and effective source of funding for our local authorities. Let's support this bill and in doing so, support the future of our communities. Governor O'Connor. Thank you.