James Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

Question 123: To ask the Minister for Finance his views on sharing general tax revenue with local authorities. [21858/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Local Authorities are multi-purpose bodies responsible for an extensive range of services. The annual budget of local authorities is formulated under eight main programme groups, including housing, water services, waste management, etc. In 2007, total expenditure by local authorities amounted to some €10 billion.

Capital expenditure is financed largely by State grants with the balance being funded from development levies and borrowings and own internal resources and property sales. Current expenditure is funded from a variety of sources, including charges for goods and services(31%), rates (26%) Government Grants and Subsidies (22%) and the Local Government Fund (20%).

The Local Government Fund (LGF) is a special central fund which was established in 1999 under the Local Government Act 1998. It is financed by the proceeds of motor tax and an Exchequer contribution. The Exchequer Contribution in 2008 amounts to €545m. The Fund provides local authorities with the finance for general discretionary funding of their day-to-day activities and for non-national roads, and funding for certain local government initiatives.

In March 2006, the then Minister for the Environment, Heritage and Local Government published an independent report on local government financing. The main recommendations, contained in the Report, included the introduction of more locally based sources of funding, the economic charging for local authority services generally, the imposition of a contribution for commercial properties not currently covered by commercial rates, the extension of water charges and the introduction of a new tax on non-primary private residences.

The extent to which the Exchequer contributes to the Local Government Fund is determined in the context of the Public Service Estimates each year. As the Deputy is aware, the Commission on Taxation, established by my predecessor in February 2008, is reviewing the structure, efficiency and appropriateness of the Irish taxation system. Under its terms of reference, the Commission is specifically charged with considering options regarding the future financing of local government. I will consider this matter further in the context of the Commission's findings.