Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

To some extent provision already exists for budgeting at local authority level via the local property tax, LPT, which facilitates a responsiveness of taxation policy to a geographically specific context, that is, each local authority area. LPT is an essential source of funding for local authorities, accounting for approximately 8% of current income this year. The annual LPT allocation supplements local authority income from commercial rates from the provision of goods and services and Government grants. LPT provides appropriate levels of financial support to individual local authorities, allowing them to sustain their continued efforts to achieve balanced budgets and helps to fund important local services such as parks, libraries, leisure amenities, fire and emergency services, the maintenance and cleaning of streets, and street lighting, all of which benefit citizens directly.

Since 2015 local authorities have had the power to vary the rates of LPT in their areas by up to 15%. If an authority decides to vary the LPT basic rate upwards by up to 15%, it retains 100% of the additional income collected in the area. If the rate is reduced, the authority forgoes the full amount of the reduced LPT income collected. This is in line with the commitment in the programme for Government, Our Shared Future.

The LPT allocation mechanism for 2023 will be changed to allow for 100% of the estimated yield to be retained locally within the local authority area where it is collected. This was done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer.

Twenty two local authorities voted to increase LPT above the basic rate for 2021. These authorities benefit from just over €20 million in additional LPT income for their own use this year as result of their decisions to vary the rates upwards. Four authorities have a reduced rate, with a corresponding reduction in income foregone. As LPT helps to fund local services, local authorities are encouraged each year to communicate to the public regarding how funds are spent.

I accept the validity of the Senator's argument that additional taxation should be raised by local authorities. It is not often that I hear such a request being made and I am surprised to hear it here. While I accept it is her point of view, I would not be encouraging local authorities to raise more taxes. While local authorities set the LPT rate, the tax is collected by the Revenue Commissioners. LPT is paid to the Revenue Commissioners and it then goes to the relevant local authorities. It is so successful, in terms of the very high rate of compliance and collection of LPT, at more than 90%, precisely because of the involvement of the Revenue Commissioners in its collection. The collection rate by the Revenue Commissioners is outstanding. It is one of the most efficient organisations in this State which is why the collection rate for the LPT funds is so high. It is very important, therefore, that the Revenue Commissioners would continue to play that strong role as the collection authority. One could almost say it acts as an agent for the local authorities in collecting these taxes. If one compares the LPT collection rate with the local authorities' own collection rates for housing arrears and other arrears of funds that are due to them, one sees they have not been very efficient at collecting same. In that context, I would not like to see local authorities given sanction to collect extra taxes because their collection record is not as good as that of the Revenue Commissioners.

A lot of motor taxation is paid online now but some of it is still collected by the local authorities. They collect it as an agent of the Exchequer and the funds go to the local authorities by way of grants from the Department of Transport to fund their roads and transport infrastructure. Another major source of funds for local authorities are commercial rates and, again, I would suggest that they have a very strong mandate in terms of setting the rate and collecting the money owed. They also have the power to set and collect parking charges in their areas and to set the development levies attached to planning permission granted in their areas.

There are already strong mechanisms in place to enable local authorities to raise and collect a significant amount of funding. The equalisation fund helps to balance funding to local authorities. Some counties cover a large geographic area and have considerable roads infrastructure, for example, but have a relatively small population from whom LPT is collected or a small commercial rates base which is why we need an overall umbrella approach to the funding for local authorities.

Senator Higgins made reference to a large US city but that does not equate to a typical local authority area in Ireland that might have 100,000 or 150,000 people in it. One cannot directly compare a large US city with an Irish local authority area. The city to which she refers would be of a scale way beyond any local authority area in Ireland.

For the various reasons just outlined, particularly the fact that the LPT already exists, I cannot accept this recommendation from Senators Higgins and Ruane.