Analysis: Higher property tax bills may be on the way, but there's isn't a simple or standard answer to what services are actually funded by the LPT
By Gerard Turley and Stephen McNena, University of Galway
With residential property owners revaluing their properties on 1 November and submitting their LPT (Local Property Tax) return to Revenue by 7 November, the question that taxpayers continually ask is, what do they get for their LPT? Unfortunately, there isn't a simple or standard answer. As with many questions in economics, the answer is…it depends.
Although collected by our national tax agency, LPT is a tax assigned to local government to fund local public services. Ireland is a highly centralised country, with the main public services provided by central government and funded by national taxes primarily in the form of income tax, corporation tax, VAT, and excise duties. These central services include justice, defence, policing, public transport, industry, agriculture, education, health and social protection.
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From RTÉ Radio 1's Today with Claire Byrne, Katie Clair, head of the Local Property Tax Branch with Revenue, on making a LPT return
This leaves the local authorities in Ireland limited to providing municipal services such as in the areas of public housing, local and regional roads, planning and development, local community and enterprise supports, fire and library services, recreation and amenities. These are funded by central government grants, fees/charges on goods and services, commercial rates, and LPT. LPT pays for only 7% of local government current spending.
For accounting and budgetary purposes, local authority functions are categorised into eight service divisions. They are housing and building; road transportation and safety; water services (in conjunction with Uisce Éireann, formerly Irish Water); development management; environmental services; recreation and amenities; agriculture, food & the marine; and miscellaneous services. Three of these functions - housing, roads and environmental services - account for over two thirds of total local government operating expenditure.
Local government functions have changed since the foundation of the State. Whereas the local authorities have lost responsibility for healthcare provision (initially to regional health boards and then to the national HSE) and water services (to the national water utility Uisce Éireann), they were assigned new functions in the areas of local and economic development and enterprise support.
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From RTÉ Radio 1's This Week, what will changes in Local Property Tax mean for you?
As for services in the 2025 local authorities’ budget, the 10 largest spending items (excluding water) by local councils nationwide are, in descending order, social housing supports in the form of Housing Assistance Payment and Rental Accommodation Scheme (19%); local and regional roads maintenance (12.5%); homeless service (6.8%); fire service (6.3%); enterprise promotion and community supports (5.5%); maintenance of local authority housing (5.5%); planning and development (3.6%); leisure facilities (3.2%); library service (2.9%); street cleaning and litter management (2.5%).
But not all local authorities are the same. Unlike central government, which provides a uniform service nationally, the raison d’etre of local government is to reflect the differences in local areas and places. Because there are variations in local conditions and preferences, local authorities make choices based on local circumstances and priorities. As far back as 1861 the political economist and philosopher John Stuart Mill wrote that "it is necessary, then, that in addition to the national representation, there should be municipal and provincial representations: and the two questions which remain to be resolved are, how the local representative bodies should be constituted, and what should be the extent of their functions".
Unlike the carbon tax which is earmarked for specific central government spending (on climate action and social welfare schemes), LPT is not ring-fenced but is used by local authorities for discretionary purposes. As with commercial rates and fees/charges on goods and services (e.g. planning fees, car parking charges), revenue from LPT goes to pay for a mix of local public services.
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From RTÉ Radio 1's News At One, house prices grew by 7.8% nationally year on year
This varies from council to council. For example, in Dublin City Council, LPT pays for only 2.1% of its 2025 revenue budget. The corresponding figure for Wicklow County Council is 10.5%. In more rural councils in the west, midlands, and border regions where economic activity is smaller and property prices are lower, LPT receipts are topped-up with an equalisation payment funded by central government to ensure a minimum level of funding is in place to deliver adequate levels of service.
Each year, your local authority can vary the LPT rate by with an increase or decrease of up to 15% and your annual LPT rate will rise or fall accordingly. with increasing demands and higher inflation of late, the majority of local authorities have increased the LPT rate and, therefore your LPT bill. This is likely to continue, with the upper limit rising to +25% from 2027 onwards.
A public awareness campaign is needed, showing us how LPT revenue is spent - and how any proposed increase in the tax will be spent
What changes are needed to improve taxpayers’ understanding and acceptance of the LPT system and, more generally, the funding of local government? The current public consultation process in respect of LPT needs improving. There also needs to be a public awareness campaign, informing taxpayers on how LPT revenue is spent, and particularly, how any proposed increase in LPT will be spent.
After all, LPT is a local tax, aimed at ensuring that the link between the price paid - in the form of tax payments - is commensurate with the level of services provided by the local authorities. Isn’t that what citizens want, namely government closer to the people, and people getting what they want?
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Dr Gerard Turley and Stephen McNema are lecturers in the J.E. Cairnes School of Business and Economics at the University of Galway
The views expressed here are those of the author and do not represent or reflect the views of RTÉ
