Michael Finneran (Roscommon-South Leitrim, Fianna Fail)

Os rud é gur thíolacadh an cheist seo don Seanad i mBéarla, freagróidh mé é i mBéarla. Current expenditure by the local government sector is forecast at about €5 billion this year. Clearly, a very significant income stream is required to underpin expenditure of this order. However, the revenue base available to local authorities is relatively narrow. Commercial rates account for just over one quarter of local government revenue, and income from goods and services account for about 28%. The balance of some €2.2 billion is funded by central Government and is almost equally divided between specific grants and subsidies, and general purpose grants from the local government fund. There are significant implications for the Exchequer. Leaving aside central Government grants and subsidies for specific services, the recently published abridged Estimates provide for a grant of €520 million to the local government fund. With income from motor tax also, this fund is used, inter alia, to support general purpose grants for local authorities.

Local government services are vital to the well being of our communities — water services, social housing and regional and local roads are good examples. Senators will be aware that the demand for these services increases all the time, but they do not come cheaply. There has been considerable discussion over many years as to how local authorities should be funded. Their current narrow revenue base is one of the reasons the government decided to introduce a €200 annual charge on all non-principal private residences effective from next year. The other reason is the scale of the economic difficulties which we face as a society. The proceeds of the charge will be used to support the provision of local services.

In his recent budget, the Minister for Finance made clear that the €200 charge will apply to all non-principal private residences in the State, with the exception of dwellings that have yet to be sold. Owners of property to which the charge applies will not be exempt simply by virtue of the fact that their main residence is located outside the State. There is nothing especially new in this. Other public and private sector charges, such as charges for waste services, are levied on those who are liable for them, irrespective of whether their main residence is in the State.

I note the point raised concerning the retention by local authorities of the proceeds of the charge. I am at present considering the detailed provisions under which this measure will be operated and I do not wish to pre-empt the outcome. However, non-principal residential properties are not distributed evenly across local authority areas. Some have a high number of rented dwellings, others have many holiday homes and yet others have few non-principal private residences of any kind within their functional areas. This suggests that it would not be equitable simply to provide for local authorities to retain the revenue stream to which the charge will give rise.

It is my intention to bring forward legislation to give effect to this measure as soon as possible, and this will address the detailed parameters under which the charge will operate, including the matters raised by Senator Doherty.