Dáil Éireann Debate, Thursday - 27 November 2025
378. Deputy Michael Murphy asked the Minister for Housing, Local Government and Heritage the impact of local property tax decisions on local authority finances over the last five years; and if he will make a statement on the matter. [67126/25]
Amharc ar fhreagraLocal Property Tax (LPT) is administered and collected by the Revenue Commissioners and subsequently transferred into the Local Government Fund (LGF). The funds are redistributed, by my Department, to local authorities in accordance with the Government’s allocation policies.
In overall terms, LPT broadens the tax base and reduces the level of central funding required by local government, freeing up resources for expenditure in other areas. Funding allocations are decided in advance of collection, based on estimates (from the Revenue Commissioners) of the LPT yield in individual local authority areas for the following liability year.
Five years ago, the annual LPT allocation to local authorities (for 2020) was €516.8m, whereas the allocation currently stands at €696.7 million for 2025 and will further increase to €767.1 million for 2026. Over the intervening years, there have been a number of changes in the LPT allocation policies, as summarised below, all of which have had an impact on the finances of individual local authorities.
Apart from the yield, there are three other factors that ultimately determine the annual LPT allocation for an individual local authority; namely, the local authority’s LPT baseline (minimum funding requirement), the amount of any surplus above an authority’s LPT baseline used to self-fund certain local housing or roads services, and, finally, the local adjustment factor.
Under the LPT allocation model, every local authority has a minimum level of funding available to it, known as the baseline. If the estimated LPT yield in a local authority area is lower than an authority’s baseline, the authority is topped-up or equalised to that baseline by the Exchequer. Since 2023, local authority allocations were impacted by the following changes;
• From 2023, the allocation model was changed to allow those authorities with an LPT income above their baseline to retain a greater portion of the surplus for their own use, increasing from 20% to 22.5% of overall yield. This is further increased to 31% of overall yield in 2026.
• Following a review in 2023, baselines for each local authority were adjusted in accordance with five criteria: population, area, deprivation levels, an authority’s locally raised income and achievement of National Policy Priorities, with every authority receiving a minimum increase of €1.5m. This led to an overall baseline increase of €75.4m in 2024.
• Building on the baseline increases of 2024, there will be a further increase of €42m in 2026, in line with the expected increased yield from revaluation expected in each local authority area. This, along with the increased surplus retained (i.e. 31%), will lead to an overall increase in own use funding in the sum of €85.4m
Local authorities may vary the rate of Local Property Tax (LPT) in their administrative area by up to 15% of the basic rate of the Tax. The decision to vary must be taken by resolution of the Council. While recent changes to the LPT legislation will allow elected members to adjust the Local Adjustment Factor (LAF) upwards to a maximum of 25%; due to the timing of the legislation, commencement of this section will be delayed until the 2027 LPT liability year.
If a local authority decides to vary the LPT basic rate upwards; 100% of the resultant additional income is available for the authority's own use. Similarly, if an authority decides to vary the LPT basic rate downwards (by up to 15%), the resultant loss in LPT income is reflected in reduced LPT funding to the authority. The power to vary LPT rates enables elected members to directly influence the level of LPT income they have to meet their expenditure requirements. 25 local authorities resolved to increase their LPT rates above the basic rate for 2026, whereas 3 local authorities decided to reduce the basic rate locally. The overall net gain arising from the variation decisions for 2026 is €23.2m.
Detailed information regarding LPT allocations for each year, taking account of any local variation decisions, where applicable, is published by my Department at the following link: www.gov.ie/en/collection/ea27d-local-property-tax-allocations/ .
