Never let it be said that Stormont is incapable of change.

The annual property tax bills, known as the rates, being sent to homes and business across Northern Ireland this week represent a quiet transformation in fiscal policy by Sinn Féin and the Democratic Unionist Party (DUP).

After 15 years of at or below inflation increases, this will be the second year of a 5 per cent increase for households. John O’Dowd, the Sinn Féin finance minister, has drafted a budget with further 5 per cent annual increases until 2028, for a cumulative total of 22 per cent. He intends this to be significantly above inflation, international events notwithstanding.

The DUP is blocking the budget but only because it wants more money for its ministers. Agreement is widely expected.

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Stormont is also rebalancing who bears the cost, with business rates increasing by only 3 per cent a year.

Businesses and households have traditionally paid half of total rates revenue each, under a convention that dates back decades. Now Stormont is shifting the burden towards households, despite voters being far more sensitive to domestic charges.

This reflects an acceptance that businesses have been squeezed enough and the general public has to be asked to pay more.

A briefing paper last week from the assembly’s Research and Information Service described the rate rises as “a significant shift” that “substantially exceeds likely inflation and will noticeably increase household bills.”

They could as easily be described as pathetic and painfully slow.

The rates are Stormont’s only serious taxation power, raising just 5 per cent of its budget. Westminster funds the rest. The briefing paper claims this locally collected percentage is “the lowest level in the developed world among comparable jurisdictions”.

Domestic and business rates were frozen for the first three and four years of this decade respectively, due to the pandemic and Russia’s invasion of Ukraine. Prices rose more than 20 per cent during that period, so the planned increases will not catch up with expected inflation, let alone inflation driven by a new energy crisis.

The average annual domestic rates bill is £1,200 (€1,375). This funds Stormont and councils, with each charging roughly similar amounts, so a 5 per cent increase from Stormont is closer to a 2.5 per cent increase in the bill the householder sees. It adds about £33 a year, or 68 pence per week.

Similar domestic taxes in Britain are almost £2,000, showing the order of increase outside observers consider justified.

Larger and faster increases have been urged by Labour and Conservative Northern secretaries, by the executive’s independent financial experts and by the construction industry, which desperately needs more investment in the state-owned water system.

These calls began before devolution was restored in 2020 and have grown in urgency as infrastructure and public services have declined. The executive has over-committed itself by £400 million this year, yet the planned rate increases will raise barely £100 million a year by the end of this decade.

Nevertheless, the increases are an achievement by the low standards of Stormont success. Keeping rates at or below inflation has been important to the DUP and Sinn Féin for various and varying reasons, all of which might be categorised as cynical populism.

After both parties took charge at Stormont in 2007, the DUP controlled the Department of Finance and raised rates about 1 per cent above inflation for three years to fund infrastructure. This was part of a posture of financial responsibility that was more about image than meaningful investment.

For the next five years, the DUP heroically boasted of keeping bills down through prudent economic management. All this required Sinn Féin’s acquiescence as coequal executive partner.

Sinn Féin has controlled finance since 2016, although international events and two lengthy collapses of devolution mean it has only had real scope to manoeuvre since 2024. Republican boasts of low bills have been framed more as help for struggling families. Sinn Féin has the additional complication of All-Ireland consistency. Its trenchant opposition in the Republic to water charging and the Local Property Tax compel it to show similar obstinacy north of the Border.

Yet it is Sinn Féin that has finally put rates up in Northern Ireland, with DUP acquiescence. The 5 per cent figure is clearly designed to be sustainable – some thought has gone into the psychology of carefully boiling the fiscal frog.

Even the minor increase in bills has political significance.

The construction industry’s latest proposal to fund water is adding a £65 levy to domestic rates bills. Sinn Féin has ruled this out, but it has raised average bills by that amount since last April and wants to raise them by the same again by 2028.

At some point this perspective must become apparent. It cannot happen soon enough: 2028 is the year many experts predict the water system will collapse.

© The Irish Times