Andrew Doyle (Wicklow, Fine Gael)
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967. To ask the Minister for Environment, Community and Local Government the main outcomes in the Inter-Departmental Group Report on Local Property Tax Design of a local property tax; and if he will make a statement on the matter. [38635/13]

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The local government funding model will change considerably in 2014. Under the Finance (Local Property Tax) Act 2012, commencing in 2014 the Minister for Finance will pay into the Local Government Fund an amount equivalent to the Local Property Tax paid into the Central Fund during that year; this revenue will be allocated to local authorities from the Fund. In addition, the establishment of Irish Water and its financial relationship with the local government sector will have a considerable impact on local authority financing.

The Government has indicated an intention to move, from 2014, to 80% retention of all Local Property Tax receipts within the local authority area where the Tax is raised. The remaining 20% of the Tax collected nationally will be re-distributed on an equalised basis to local authorities within the context of the annual allocations of General Purpose Grants. The approach used to allocate the 20% of Local Property Tax revenue available for equalisation will depend on factors such as overall yield and yields at individual local authority level. The priority will be to support those local authorities with weaker funding bases.

The Government decided that the relevant Departments would consider the balance of taxation and spending measures necessary to support the intention to move to 80% local retention of the Local Property Tax. A working group comprising a number of Departments, including my own, is examining the issues involved , and relevant decisions in respect of local government funding in 2014 will be taken in the context of Budget 2014.

I expect the Local Property Tax to have multiple benefits, including a more sustainable and resilient system of funding for local authorities and therefore a sounder financial footing for the provision of essential local services; greater local scope for financial decision-making concerning service provision - in particular, the inclusion of the local variation mechanism from 2015 will further increase the autonomy of local authorities; and a strengthening of democracy at local level with a more active relationship between local authorities and local electorates. A stronger democratic relationship and clearer lines of accountability can only have a beneficial impact on service provision from the perspective of the service user.

Placing the local government sector on a more sustainable financial footing is an important objective of the changes to the funding of the local authorities . I am satisfied that the changes which are currently underway will deliver a model of funding which is sustainable in the broadest sense into the long-term.