Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

On the road tax issue, if we use that purely for roads we will have to find other funding streams for the many other areas it funds. The Department of Finance is very strong on not ring-fencing funding from any given tax for any given purpose unless there is a direct relation between the polluter pays principle or an incentive around conservation. The provision of water services is an obvious example of that whereby we try to link the cost of capital investment with a charging system that encourages conservation, better management of water and so on. In terms of broad taxes, much of the money from road tax goes into roads. That money is collected, goes to the Exchequer and the Exchequer decides on the most pressing needs in terms of the overall revenue streams they have to meet expenditure demands.

On the point made by Deputy Ellis that local authorities should not be penalised for reducing local property tax, if a council makes a decision to reduce its income, that is a local democratic decision. The point of trying to introduce more local decision making around revenue raising and taxation with the local property tax, LPT, is that if people decide they want to increase a tax, they have more money to spend. If they decide they want to reduce a tax, they have less money to spend, but they cannot reduce their revenue stream deliberately and then say the Government has to give them the money. We cannot have that. Otherwise, we would have local decision making on the basis of being popular, reducing taxation collection and simply relying on the national Exchequer to pick up the tab every time. We need a mature discussion on balancing streams between local and national Government in terms of the money that should come from the LPT, the central Exchequer or direct levies or charges for certain types of services or whatever. That happens in every country.

I would like to see more decision making at local level so that councillors, with their management teams, can make decisions on what their areas need, how they will fund that and the tools they have to be able to do that. Unfortunately, like the issue of water, local property tax became a political issue. People are making political decisions, and because they did not agree with its introduction they will maximise what they can do in terms of undermining it by reducing it by 15% a year. That is a decision that has been taken by some, and there is a consequence for that, namely, they have less money to spend.

We are trying to transfer revenue raising decision making powers from the centre to local authorities, where possible. There are some local authorities that do not have a big percentage of their overall income coming from LPT. That is the case in Carlow, for example. Even if they decided to increase the LPT significantly in Carlow, say, by the full 15%, it does not solve the problem-----