Fergus O'Dowd (Louth, Fine Gael) | Oireachtas source

I thank the Deputies for raising this important matter which I am taking on behalf of my colleague, the Minister for the Environment, Community and Local Government.

In recent months there has been extensive discussion of the issue of local property tax, LPT, and how local retention of that tax might impact on local authorities in the future. It is a complex issue that will need much consideration as the Estimates process for 2015 progresses. The Departments of Public Expenditure and Reform, Finance, Transport, Tourism and Sport and the Environment, Community and Local Government have been examining the implications of local retention and variation of local property tax in recent months. They have considered a wide range of issues, including the implications of 80% local retention of LPT, the new power that local authorities have, with effect from today, to vary the basic rate of LPT by up to 15% and how those policies might potentially impact on the overall Exchequer financial position and the financial positions of individual local authorities.

For local authorities, 2014 and 2015 will be particularly challenging years given that they are undergoing the most fundamental structural changes since the foundation of the State, as well as a significant restructuring in respect of water services and completely changed funding and service delivery models. These changes to the local government funding model will need to be carefully managed. The Departments concerned are actively considering the issues arising from these changes and, following consideration by the Government, local authorities will be advised of the outcome.

In terms of local retention of local property tax, the Government has indicated its intention to move to 80% retention of the tax from 2015. A decision to allow local authorities to retain 80% of LPT locally and the power to vary LPT rates will facilitate further implementation of the local government reform programme, a core element of which involves greater devolution to the local government sector through supporting enhanced local decision-making on spending priorities.

The Minister fully recognises that it is necessary for Government to provide funding certainty for local authorities as early as possible if they are to be able to meet their budgetary obligations and consider the question of whether to vary LPT for 2015 by the end of September 2014. There is a need to recognise that the LPT base outside of the cities and main commuter zones is narrower and there will be a requirement to equalise the income position of those local authorities to ensure an acceptable standard of service delivery is maintained throughout the country. The issue of LPT allocations, both from local retention rates and from any subsequent income provided to local authorities to equalise distribution across the State are matters for the Department of the Environment, Community and Local Government. The Minister considers that is essential to resolve them at the earliest opportunity and he will continue to work with Government colleagues to ensure that information in respect of these decisions is available to local authorities to facilitate their budgetary timeframe.

The provision of other central government grants to local authorities will be considered, as normal, as part of the Estimates process. The Minister and Ministers of State at the Department of the Environment, Community and Local Government will engage with the Minister for Public Expenditure and Reform in this regard, particularly in respect of funding for housing matters, which is currently a significant source of funding for local authorities from central government. The matter of overall housing grant allocations for 2015 is, of course, inextricably linked with the new social housing strategy which is currently being developed by the Minister of State with responsibility for housing and planning, Deputy Jan O'Sullivan, and which is expected to be finalised by the end of September. The level of central government grant funding to be provided to local authorities from other Departments is a matter for those Departments and for the Minister for Public Expenditure and Reform.

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