Dublin Councillors Must Reverse Short-Sighted LPT Decision

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By Chamber Press Office, 25 November 2019

Dublin Chamber has warned councillors in Dublin City that there is no justification for further ad-hoc increases in commercial rates in the city – and poses a risk to future employment growth.
 
The Chamber, which represents 1,300 businesses in the Dublin region, said that if councillors need to plug a hole in their budget then they should start by reversing their short-sighted decision to retain a 15% reduction in the Local Property Tax rate (LPT).
 
Speaking ahead of tonight’s meeting of Dublin City Council, Dublin Chamber said it is unthinkable that businesses in the city – who already generate more than one third of Dublin City Council’s revenues – would essentially be held to ransom.
 
Dublin Chamber said that a more modest reduction of -5% in LPT is one of the measures that would cover the entire shortfall, generating additional revenue of around €8m. The Chamber said councillors should also look to efficiencies and other levers in order to raise any other required funds.
 
Dublin Chamber had cautioned Dublin City councillors in the summer that retaining the -15% reduction in Local Property Tax would be a retrograde step, which would deny vital funds for Dublin City Council at a crucial time.
 
According to Dublin Chamber CEO Mary Rose Burke: “The current funding issues are proof that the decision to retain the -15% LPT reduction was the wrong call. It was a political decision aimed at appeasing voters, but one which failed to recognise the need for Dublin to be adequately funded. The idea that businesses would be left to pick up the bill, when councillors have many other fund-raising levers available to them, is hugely disrespectful to the thousands of rate-paying businesses in the city. Councillors should be looking at policies which will allow these companies to maintain and create jobs in the city – but any increase in commercial rates runs the real risk of jobs being lost.
 
“A further increase in commercial rates would be unpalatable for businesses in the city and would heap more pressure on the city’s competitiveness. Businesses in the city are being hit by cost increases from all angles, with last year’s VAT and commercial rates hikes coming on top of rising insurance and utilities costs and increased wage pressure from staff. There’s more to come too, with water rates in the city set to rise by an average of 18% next year,” said Ms Burke.
 
The Chamber has dismissed claims from some councillors that such an increase would not result in any additional revenue for Dublin, citing a document* issued by Dublin City Council in the summer, which outlined that 100% of revenue from a move on LPT would be retained within the Dublin City area.
 
Ms Burke said: “Dublin Chamber does not accept the suggestion that a change to LPT would have no positive effect on City Council finances. Both Dublin City Council and the Department of Housing, Planning and Local Government have advised that 100% of revenue accrued from a change to the LPT rate in 2020 would be retained by the Council. The Local Property Tax was introduced as a progressive measure aimed at broadening the tax base and to provide a stable funding source for local authorities. LPT is an important revenue stream for Dublin City Council and councillors must make best use of it to ensure that the region is adequately funded.”
 
Dublin Chamber said that once the Council’s 2020 budget has been agreed, a real conversation needs to take place regarding how local government is funded.
 
Ms Burke: “It is unfair on the businesses and people of Dublin that so much of the money raised locally is going to other areas. This funding model is now having a real impact on services in Dublin city, at a time when services in the city are under huge pressure. Dialogue is now required between local and central government to determine a more suitable and appropriate funding structure, ensuring that the current situation is never repeated.”