Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The funding of local authorities is a matter for the Department of Public Expenditure, NDP Delivery and Reform, and the Department of Housing, Local Government and Heritage. The Finance (No. 2) Bill legislates in respect of fiscal matters only, such as taxation. That said, there already exists provision for budgeting at the level of local authorities via the local property tax, LPT, which facilitates the responsiveness of taxation policy to geographic-specific contexts. The LPT is an essential source of funding for local authorities, accounting for approximately 9% of current income this year. The annual LPT allocation supplements local authority income from commercial rates, from the provision of goods and services and from Government grants. The LPT provides appropriate levels of financial support to individual local authorities allowing them to sustain their continued efforts to achieve balanced budgets. It helps fund important local services such as parks, libraries, leisure amenities, fire and emergency services, maintenance and cleaning of streets and street lighting, all of which benefit people 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. The LPT allocation mechanism changed from 2023 onwards to allow for 100% of the estimated yield to be retained locally within the local authority area where it is collected. Twenty-two local authorities voted to increase LPT above the basic rate for 2022. These authorities benefit from just over €24 million in additional LPT income for their own use this year as result of their decisions to vary the rates upwards. Four have a reduced rate, with a corresponding reduction in income foregone. As LPT helps fund local services, local authorities are encouraged each year to communicate to the public regarding how funds are spent. I do not propose to accept the recommendation.