Phase 3 Case Study: Designing and Implementing the Local Property Tax (LPT) in Ireland

One of the important insights in policy development is that a strong connection between design and implementation is a critical ingredient for success. Many policies have failed because we didn’t anticipate the problems and challenges of implementation at design phase.

In the design phase of the LPT, recognising the importance of a well-informed and inclusive process, officials engaged in extensive consultations with citizens, local authorities, and experts. This collaborative approach allowed for a deep and nuanced understanding of the concerns and aspirations surrounding property taxation.

This would suggest that another necessary condition for the success of the LPT was that it be reasonably fair. Many, if not most, aspects of the tax’s design were strongly influenced by this requirement, including its:

• proportionality
• modest cost for a typical household
• the banding for valuation purposes, and
• the availability of a deferral of payment option

It is not enough that a tax is fair. It must also be understood to be fair. This means that simplicity and comprehensibility are important features of an acceptable tax.

Recognising the significance of taxpayer awareness and compliance, the Revenue Commissioners spearheaded efforts to explain the LPT to the public. It issued clear and accessible information that detailed tax obligations and calculation methods. Through various communication channels, including online resources and direct support, the Revenue Commissioners fostered a sense of transparency and understanding among taxpayers.

Another characteristic of good policy design is the rigorous and open-minded evaluation of different options. A comparison of Irish Water Charges with the Local Property Tax shows how, for Irish Water, universal free allowances were accepted unquestionably without its implications being understood.

In contrast, while there was a commitment to a site value tax as the basis for property valuation with the LPT, the question was kept open. ‘The question was kept open until the practical implications of such a valuation base had been thoroughly examined and found to be off-putting, and a different base was selected’. (12)

(12) O’Leary (2018), op. cit, pg. 85.

The example of the LPT shows that successful policy design is not just a technical matter of choosing SMART objectives. Very often, policy design must incorporate and anticipate public views which may cause assumptions to be revised or revisited. Bear this in mind when it comes to presenting matters for decision.