Alice-Mary Higgins (Independent) | Oireachtas source

Recommendation No. 10 proposes that within 12 months of the passing of the Bill, the Minister shall lay a report before the Houses of the Oireachtas examining the potential for the transfer of certain taxation and expenditure competencies from the Government to local authorities and the potential implications of such a transfer in respect of the delivery of public services, the responsiveness of the taxation policy to geographic-specific contexts and the potential benefit in strengthening local democracy and community well-being. The national delivery of our public services is crucial. I refer in this recommendation to transferring certain functions to local government, but there is also scope for additional taxation and expenditure competencies to be taken up by local authorities.

Taxes are a central source of revenue for local authorities. In many countries, local government bodies have the power to set their own tax rates, raise additional taxes and develop targeted taxation systems. That power is usually limited by legislation and, of course, the national government has overarching power to set the permissible parameters of the rates of tax that can be imposed by local government and the areas of appropriate expenditure. Under many such systems, local authorities have the power to procure loans to buy and sell property and engage in business activities, as provided for in legislation. Many even have the power to establish companies, co-operatives and foundations. A large number of countries have national constitutions that include provisions relating to the power and autonomy of local authorities. In Germany, for example, there is municipal financial sovereignty.

In Ireland, local authorities have lost considerable power over the recent period and they face significant challenges. There are very few targeted schemes, the property tax being one of the only examples, that allow local authorities to apply targeted taxation measures and to follow through with targeted expenditure. As we know, there is a wealth of wisdom, understanding and local knowledge within local government in respect of such measures. We also know that some parts of the economy have very particular impacts in specific geographic areas. In San Francisco, to give an example of how things are done internationally, a small levy is charged on hotel night stays, the revenue from which goes to a fund that is directed towards the arts, creative activity and community activity in the city, which are, in themselves, some of the major factors that attract tourists to that location. The city authority was able to introduce a targeted measure that is appropriate to the context of its locality both in terms of the taxation itself and how the expenditure of the revenue raised is ring-fenced.

There are certain local authorities in the State that are very aware of areas of opportunity for taxation that may not be appropriate to apply in the same way in every part of the country but that are, for instance, suitable to an urban area or a local county council area. These are areas in which local authorities might identify potential for a small levy or additional taxation, which could serve as a resource for those authorities. As we know, many local authorities have struggled to reflect their ambition and the ideas they have to meet the needs of those who live in their area.In Spain, for example, some local authorities have ring fenced a very small amount of their budget for participatory budgeting. They have all of the normal budgeting that would be done, including national and local budgeting but a very small revenue or tax is gathered and its expenditure is decided on the basis of participative budgeting. We are talking about a ring-fenced amount which, at a few million euro, is small in the grander scheme of things but it empowers local communities and local areas to have a say in how they can effectively address the ideas and needs of their local areas. It gives a strong sense of engagement in democracy and decision making at a local level. This is quite a wide issue but is one we need to start examining. Ireland is somewhat unusual in how little power its local authorities have in this regard. If we strengthened this provision or even started piloting models under which it could be done, we might be surprised by the beneficial outcomes that could arise.

I urge the Minister to accept the recommendation. I have given a year for the report looking into those possibilities to be published.