Hildegarde Naughton (Galway West, Fine Gael) | Oireachtas source

I thank the Deputy for giving me the opportunity to outline the Government's supports for local authorities, with particular reference to County Cork.

The All-Ireland Research Observatory, AIRO, report the Deputy refers to was received by the Department of Housing, Local Government and Heritage on 9 June and is under consideration by officials. It is a wide-ranging report which covers funding from a variety of different Departments for a range of issues and schemes. Many of the funding lines are outside the remit of the Department. The report has also been sent for consideration to other relevant Government Departments.

The funding system for local authorities is complex with authorities deriving their income from a variety of sources, including local sources such as commercial rates, charges for goods and services and funding from central Government. Most of the funding from central Government must be used for specified services. These can be grouped into five broad programme categories: recreational, education, environment, housing and transport.

On funding streams specifically from the Department of Housing, Local Government and Housing, €135.3 million and €167.5 million was provided to Cork County Council in 2019 and 2020, respectively. The increase between 2019 and 2020 is due to an increase in housing funding, as well as funding in respect of the Covid-19 commercial rates and other Covid-19 related expenses which occurred in 2020. It is a matter for each local authority to consider how it can maximise local income sources and manage its own spending in the context of the annual budgetary process.

Local authority members may decide, as part of the process, to vary the annual rates on valuation, ARV, and local property tax, LPT, in order to increase the revenue available to them. I note for 2020 and 2021, Cork County Council raised its LPT rate by 5% and 7.5%, respectively, forgoing the maximum 15% raise, or just over €3 million in 2020 and €2.4 million in 2021.

I also refer to the recently announced plans to reform the local property tax. These reforms will involve bringing new homes which are currently exempt from LPT, into the taxation system, as well as providing for all money collected locally to be retained within their county. This will be done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer, as is currently the case.

The Minister for Finance, Deputy Donohoe, recently published the heads of the Finance (Local Property Tax) (Amendment) Bill 2021. The Bill will give effect to a package of measures, in line with the programme for Government, to address the future of the local property tax. The legislation required to implement those changes falls under the remit of the Department of Finance, as a tax policy matter, and will be considered by the Houses of the Oireachtas in due course. The Minister, Deputy Donohoe, also signalled the Government's intent to move to 100% local retention from 2023. Any changes to the allocation process may be considered in that context.

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