Local Authority Funding

Dáil Éireann Debate, Thursday - 24 October 2013

Thursday, 24 October 2013

Questions (184, 185, 186)

Barry Cowen

Question:

184. Deputy Barry Cowen asked the Minister for the Environment, Community and Local Government if he will provide a county breakdown of the local government fund general purpose grant allocations in 2014. [45401/13]

Barry Cowen

Question:

185. Deputy Barry Cowen asked the Minister for the Environment, Community and Local Government the mechanism that will be used to equalise revenue across local authority areas in 2014 following the full introduction of the property tax. [45402/13]

Barry Cowen

Question:

186. Deputy Barry Cowen asked the Minister for the Environment, Community and Local Government the time frame for the introduction of variable property tax rates in local authorities; and when local authorities will retain 80% of revenue collected. [45403/13]

Written answers

Minister for the Environment, Community and Local Government

I propose to take Questions Nos. 184 to 186, inclusive, together.

The local government funding model will change considerably in 2014. Under the Finance (Local Property Tax) Act 2012, commencing in 2014 the Minister for Finance will pay into the Local Government Fund an amount equivalent to the Local Property Tax paid into the Central Fund during that year; this revenue will be allocated to local authorities from the Fund. In addition, the establishment of Irish Water and its financial relationship with the local government sector will have a considerable impact on local authority financing.

The Government has indicated an intention to move to 80% retention of all Local Property Tax receipts within the local authority area where the Tax is raised. The establishment of Irish Water presents local government with significant organisational and financial challenges in 2014 and, in this context, it has been necessary to defer defining a certain proportion of the proceeds of the Local Property Tax to be retained in each local authority until 2015. This approach allows maximum flexibility in allocating Local Property Tax in 2014 with the priority to support those local authorities with weaker funding bases. The 2014 Local Government Fund General Purpose Grants will be announced in due course.

Under section 20 of the Finance (Local Property Tax) Act 2012, a local authority may, as a reserved function , resolve to vary the rate of the Local Property Tax within its functional area by a maximum of +/-15%. This power will be available to local authorities effective from 2015, as the relevant sections of the Act will come into operation on 1 July 2014.

Section 20 of the Act requires that, in varying the rate, a local authority must take account of its financial position, its income and expenditure , and of the financial effect of the varied rate on the economy of its functional area, including on those persons who will be liable to pay the Local Property Tax. Section 20 also provides that the Minister for the Environment, Community and Local Government may make regulations, including in respect of public consultation requirements prior to the variation of the rate of the Tax. I will give consideration to the making of such regulations in advance of the coming into operation of section 20 of the 2012 Act.

I expect the Local Property Tax to have multiple benefits, including a more sustainable and resilient system of funding for local authorities and therefore a sounder financial footing for the provision of essential local services; greater local scope for financial decision-making concerning service provision - in particular, the inclusion of the local variation mechanism from 2015 will further increase the autonomy of local authorities; and a strengthening of democracy at local level with a more active relationship between local authorities and local electorates. A stronger democratic relationship and clearer lines of accountability can only have a beneficial impact on service provision from the perspective of the service user.