Vol. 453 No. 4
11 Mr. Cullen asked the Minister for Finance the plans, if any he has to amalgamate the residential property tax and local services charges; and if this new tax will be payable to the Central Exchequer or to local authorities. [9418/95]
Limerick East): The Government has given a commitment to commission a professional study on the funding of local government with a view of publishing a White Paper on the subject and seeking to develop the maximum degree of consensus. In its policy statement, A Government of Renewal, the Government stated that the future of the residential property tax will be considered in the context of this study.
My colleague, Deputy Howlin, the Minister for the Environment, who will be commissioning the professional study, has obtained proposals from interested bodies to undertake the study. It is expected that it will commence in the near future.
I take it that that review will not be completed by the summer since we are almost at the end of this parliamentary session. Would the Minister agree that it is most unhelpful to local authorities, facing into consideration of the 1996 estimates in the autumn, that members of the Government are sending out different signals to them with regard to their future? On the basis of what he said in his reply, is it the intention of the Government that service charges will remain until such time as the study to which he has referred is completed?
(Limerick East): I am not aware of any different signals being sent to local authorities. My colleague, the Minister for the Environment, has responsibility for local authorities in accordance with Government policy. The programme, A Government of Renewal, set out clearly what we will do in this context. That is now being put into place, the relevant Minister having been in touch with interested bodies. It is expected that the professional study will begin very shortly. No other decision has been taken in respect of any local or national tax within the context of that study. Whenever one commissions experts to examine the effectiveness of any form of taxation one must await their report before taking any such decisions.
Obviously, the Minister was not listening to his colleagues in the Labour Party at the recent Labour Party conference at which all sorts of suggestions were put forward. Is he aware that £55 million is the estimated amount raised by local authorities to fund many projects at local government level? Furthermore, would he agree it would not be possible for the Department of Finance to find that funding and that, on that basis, it will be the policy of this Government, until such time as the review of amalgamation or otherwise of the residential property tax and local service charges has been completed and the Department of Finance that such charges remain, and that funding of £55 million-plus will be provided by local authorities using their own resources?
(Limerick East): The Deputy will readily appreciate that if and when any tax is dropped, always there will be a commensurate reduction in the amount of money available for expenditure. Unless expenditure is lowered at the same time as the tax is abolished, it must be funded in some other way. The Minister for the Environment is about to commission a professional study which will investigate all relevant matters. Any Members who have served on local authorities will be aware that this is a very vexed political issue, one of great controversy, but it is the intention of the Minister for the Environment to publish a White Paper to ascertain what degree of consensus can be found among the different parties serving both here and on local authorities. Certainly, a significant amount of money is raised by way of local charges. I do not have information to authenticate the Deputy's figure but I can accept it. For example, the residential property tax raised £14 million in 1994 and even though this year's Finance Bill will reduce that yield by approximately £4 million, £10 million in addition to what the Deputy suggested is a significant amount of money.
While I appreciate that the Minister for Finance is not available, would the Minister for Health accept that he has not answered my fundamental question which was: is it the policy of this Government that the service charges regime at present operated by local authorities will remain until such time as the professional study to which he referred in his reply is completed? It is important that the Minister confirm that that is the intention of the Government.
(Limerick East): I have fully clarified the position inasmuch as the Deputy asked a particular question about the amalgamation of the residential property tax and local service charges. I am saying that no decision has been taken on that issue. We are simply fulfilling the commitment given in A Government of Renewal and the Minister for the Environment is proceeding to fulfil that commitment. Any change of taxes will be announced in the usual way within the budgetary context and implemented in the relevant Finance Bill.
There will be no changes this autumn?
(Limerick East): I did not hear that the Minister for Finance was planning a supplementary budget in the autumn.
In regard to the study the Minister for the Environment is proposing to commission, first, would the Minister present state the identity of the bodies with which he has consulted; second, the cost of the study — the amount of money that has been set aside for its commission — and, third, can he indicate the time span within which it is proposed that those engaged in this study will report to Government so that a view can be taken on their recommendations?
(Limerick East): Unfortunately, I do not have any of that information on file.
That is an extension of the question.
(Limerick East): The question tabled was not about the study but rather the Government's intention on whether to amalgamate the residential property tax and local service charges. It being a separate question that information would not normally be on the file.
I am not criticising the Minister for not having it on file; I thought he might have it available. If the Government is not in a position to answer Deputy Cullen's question now, will the Minister say when it is hoped the Government will be in a position to say that it has formulated a policy in this area?
(Limerick East): I have replied to Deputy Cullen's question in so far as it is relevant to the Minister and the Department of Finance. The question on the study is one for the Minister for the Environment to whom I suggest the Deputy table a separate question.
A question which I put down today on that issue was transferred to the Minister. Will the Government provide in the Estimates for the rates support grant to local authorities? Is the Minister saying that is part of the Government's fiscal policy for next year?
(Limerick East): The Deputy is asking questions which a Minister for Finance would not answer at this time of the year. It is not because I am standing in for the Minister for Finance that the Deputy is not getting the information. He is aware of the budget and the published Estimates and the Finance Bill was recently discussed in the House. Next year's Estimates campaign has not yet commenced and no Minister for Finance will say at this time of the year what he intends to do next autumn in terms of a huge chunk of public expenditure.
That is poor consolation to local authorities.
(Limerick East): Local authorities do not have a problem; they understand what is going on.
