HOMES DAMAGED BY mica will be exempt from the Local Property Tax (LPT) for a period of six years, Paschal Donohoe has told an Oireachtas committee this afternoon.

The Minister for Finance was answering questions from TDs and senators about the government’s overhaul of the LPT at the Joint Oireachtas Committee on Finance, Public Expenditure and Reform and Taoiseach.

The committee is conducting pre-legislative scrutiny of the Finance (Local Property Tax) (Amendment) Bill 2021, which Donohoe said will be enacted before the Dáil rises for the summer recess.

If passed, the legislation will widen the existing LPT bands by 75% to account for the surge in house prices since the tax was introduced in 2013.

In response to a question from Sinn Féin finance spokesperson Pearse Doherty, Minister Donohoe confirmed that affected homes will be exempt from the LPT for six years.

Approximately 1,000 homes in Donegal alone have been damaged by the presence of muscovite mica in building blocks, reducing the strength of concrete used to make them. 

Overall, an estimated 4,000-5,000 houses in Donegal, Mayo, Sligo and Clare have been damaged although the final figure could be double that, according to Minister for Housing Darragh O’Brien.

A redress scheme is currently in place but campaigners are unhappy with its terms and the government is currently conducting a consultation on the matter.

Today, Minister Donohoe said he was “very much aware of the massive anxiety” caused by the mica scandal.

Asked by the Donegal TD how houses would qualify for the exemption or if homeowners will be required to pay for an engineers’ report, Donohoe explained that the exemption will be given to properties eligible for the redress scheme that “will be or is currently being remediated”.

Equalisation fund

Minister Donohoe also said the LPT equalisation fund will in future be paid out to local authorities from the exchequer.

Under the current system, 80% of the money collected by a local authority from LPT is retained to fund spending while 20% goes into the equalisation fund.

Local authorities with smaller property tax bases than others are then allocated money from the fund, an effort to smooth out funding inequalities between councils.

However, Doherty said that under the government’s current proposals, local authorities will retain 100% of the LPT receipts “so therefore there wouldn’t be an equalisation fund”.

Donohoe said that the equalisation fund system was not contained within the original Local Property Tax Act of 2012 nor is it included in the new Local Property Tax Bill.

“It’s a separate matter for the Department of Housing,” he said.

However, the minister added that he has a “commitment” to maintaining “the equalisation approach” by making up any shortfalls through exchequer funding.

“The objective is to put that in place over the two year periods, commencing with the local authority budgetary periods in 2023, and then into 2024,” he said.

“I will work out how that will operate with Minister O’Brien but it is my intention is that no local authority, no county will be worse off as a result of this change.”