Dáil Éireann Debate, Thursday - 6 February 2014
125. Deputy Michael Healy-Rae asked the Minister for the Environment, Community and Local Government in view of his statement that he wants to keep 80% of the property tax for the purpose of setting up Irish Water, if it is his intention, when Irish Water is set up, to give 100% of the funding back to the local authorities; and if he will make a statement on the matter. [6056/14]
View answerI did not state that I wished to retain 80% of property tax for the establishment of Irish Water. The local government funding model has changed considerably in 2014. For example, the establishment of Irish Water and its financial relationship with the local government sector will have a considerable impact on local authority financing. In addition, under the Finance (Local Property Tax) Act 2012, the Minister for Finance, from 2014 onwards, is to pay into the Local Government Fund an amount equivalent to the Local Property Tax paid into the Central Fund during that year; this will contribute to a range of financial supports being provided to local authorities, including General Purpose Grants and funding, on the basis of Service Level Agreements, for water services which local authorities will be providing on behalf of Irish Water.
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. Given the significant changes to local government financing already taking place in 2014, as outlined above, 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 in the form of General Purpose Grants, with a priority to support those local authorities with weaker funding bases.
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; 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.
