Local Property Tax in the Western Region

Local Property Tax (LPT) data for each county is released regularly by Revenue and includes information on the number of properties, the compliance rate and the amount of LPT collected.  While data is available to June 2016, because collection for the year is not complete[1] the focus of this post is on data for 2013 to 2015 for Western Region counties[2].

The Local Property Tax (LPT) is an annual self-assessed tax charged on the market value of all residential properties in the State.  It came into effect in 2013 and is being administered by Revenue[3].

In this post the properties returned, the compliance rate and the amount of LPT collected and the property valuation distribution for counties in the Western region is considered.

Properties Returned

The total number of properties returned for payment of the LPT in the Western Region was 354,400[4] in 2015.  This varies from 15,600 in Leitrim (this is the smallest number in any local authority in Ireland) to 70,500 in county Galway.

Figure 1: Properties returned for the LPT in the Western Region in 2015

 lpt-blog-fig-1Source: Local Property Tax (LPT) Statistics 2013-2015, Revenue, June 2016

Donegal had a similar number of properties returned in 2015 (70,300) while Mayo had (58,000) and Clare (51,500) were the next largest counties.

Nationally 1,861,000 properties were returned for collection in 2015 with the largest numbers of properties, as would be expected, in Dublin city (229,700) and Cork city (163,700) followed by the other Dublin Local Authority areas.

In all counties of the Western Region there were fewer properties returned in 2015 than in either 2013 or 2014, although this is likely to relate to some extent to the time it can take to collect some LPT.

Compliance Rate for LPT

The national compliance rate[5] for payment of the property tax was 97% in 2015 but there is significant variation in the compliance rates among counties.  Donegal had the lowest compliance rate in the country in 2015 at 91.5%, with Leitrim the next lowest (93.8%).  Laois (99.7%) has the highest compliance rate in the country, followed closely by Fingal (99.6%).

Three Local Authority areas in the Western Region Galway county (97.9%), Galway city (97.1%) and Roscommon (97.1%) had compliance rates higher than the national average.

Compliance rates have varied over the last few years with most Local Authority areas showing a decline from a peak compliance in 2013 or 2014.  However, this is due, at least in part, to the ongoing nature of the collection process.

Figure 2: Compliance rates for LPT in the Western Region 2013-2015

lpt-blog-fig-2Source: Local Property Tax (LPT) Statistics 2013-2015, Revenue, June 2016

Donegal, for example, had a compliance rate of 93.1% in 2013 and this was also, at that stage, the lowest in the country.  In contrast in Galway city compliance increased in 2014 (97.4%) and fell slightly in 2015.

LPT Collected

In 2015 €437m in Local Property Tax was collected nationally (of which €62.7m was collected in the Western Region).  In the Western Region the least amount (€2.1m) collected for a local authority area was for Leitrim.  This was joint lowest nationally with Longford where the same amount was collected in 2015.  Roscommon (€3.8m) and Sligo (€5.2m) also had relatively low LPT amounts collected.

Galway county had the highest LPT take in the Western Region at €14.3m in 2015 with Donegal (€10.8m) and Mayo (€9.9m) somewhat lower. Clare and Galway city both collected over €8m.

Figure 3: LPT collected for each Local Authority Area 2014 and 2015

lpt-blog-fig-3Source: Local Property Tax (LPT) Statistics 2013-2015, Revenue, June 2016

Clearly the amount collected for each local authority area is a function of the number of properties in that area, the compliance rate and the Local Adjustment Factor applied by the Local Authority as well as the valuation of the properties.

Valuation Bands in Local Authorities.

With substantial variations in property values across the country, there is also very significant variation in the proportions of properties in each Local Authority area in each valuation band.  For example, in Longford 60.1% of properties are valued at less than €100,000 while in Dun Laoghaire Rathdown only 1.4% are.  Similarly in Dun Laoghaire Rathdown 58.3% of properties are valued over €300,000 while only 0.2% are in Leitrim and Longford.

Figure 4 below shows the percentage of properties in each valuation band for the Local Authority areas in the Western Region.  Leitrim (59.7%), Roscommon (56.1%) and Donegal (50.2%) all had more than half of their properties in the lowest rate band.  This compares to the national average of 27%.

Figure 4: Percentage in each valuation band for Local Authorities in the Western Region

lpt-blog-fig-4Source: Local Property Tax (LPT) Statistics 2013-2015, Revenue, June 2016, preliminary analysis

In contrast only Galway city had more than 5% of its properties valued over €300,000, compared to the national average of 9%.

The variation in the proportions of properties in the different valuation bands is not unexpected but it does have very significant impact on the revenue a local authority can gain from the LPT.

Conclusion

While not the most significant revenue stream for Local Authorities the LPT is nonetheless important.  The blog PublicPolicy.ie  has shown that the Local Property Tax (LPT) will account for a quarter of the total income of the Local Government Fund (LGF) in 2016[6], totalling €437.6m, While motor tax is expected to comprise 60% of the Local Government Fund income, exchequer funding (16%) is the other source.

It is useful to have a good understanding of the differences among counties in LPT collected, compliance rates and property valuation.  While for some Local Authorities LPT can be an important source of funding in many of the Western Region Local Authorities the LPT is not likely to be a very significant revenue source.

 

Helen McHenry

 

[1] The Revenue continues to collect LPT for the years 2013-2015 also.

[2] Updated in June 2015

[3] Thanks to staff at revenue statistics unit for providing me with data in excel format and for answering my questions about the LPT.

[4] Numbers have been rounded.

[5] The compliance rate compares the number of properties returned against the expected register of 1.95m extrapolated from CSO census information.  Work is ongoing to validate the Revenue register size.

[6] http://www.publicpolicy.ie/local-government-fund/

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About WDC Insights

WDC Insights is the blog of the Western Development Commission Policy Analysis Team. The WDC Policy Analysis team analyses regional and rural issues, suggests solutions to regional difficulties and provides a regional perspective on national policy objectives. Policy Analysis Team Members are: Deirdre Frost, Helen McHenry and Pauline White. We will all be posting here. You can contact us here, or use our firstnamelastname at wdc.ie Follow us on Twitter @WDCInsights
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