Written answers

Thursday, 5 December 2013

Department of Environment, Community and Local Government

Local Government Fund

Photo of David StantonDavid Stanton (Cork East, Fine Gael)
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28. To ask the Minister for Environment, Community and Local Government further to Parliamentary Question No. 426 of 19 November 2013, with regard to payment of 2014 local property tax receipts into the Local Government Fund, if he has, or intends to issue guidelines or regulations to local authorities as to the services the 2014 Local Government Fund general purpose grants can be used to fund; if so, if he will provide a list of these services; and if he will make a statement on the matter. [51920/13]

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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32. To ask the Minister for Environment, Community and Local Government his plans for funding local authorities in 2014, in view of the news that the local property tax money for 2014 will fund Irish Water; and if he will confirm that thereafter the local property tax will be retained by the local authorities and if the Local Government Fund will be reduced by the same amount; and if he will make a statement on the matter. [51934/13]

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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I propose to take Questions Nos. 28 and 32 together.

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 Local Government Fund will continue to receive motor tax receipts in 2014.

It should be noted that t he funding to be provided to local authorities for the provision of water services in 2014 will be governed by Service Level Agreements between Irish Water and individual authorities.

The Government has indicated an intention to move to 80% retention of all Local Property Tax receipts within the local authority area where the Tax is raised. The establishment of Irish Water presents local government with significant organisational and financial challenges in 2014. Service provision responsibilities will shift from the local authorities to Irish Water, infrastructure will be transferred, financing arrangements will alter and local authorities will operate on behalf of Irish Water under Service Level Agreements. These changes must be managed. In this context, it has been necessary to defer defining a certain proportion of the proceeds of the Local Property Tax to be retained in each local authority until 2015. This approach allows maximum flexibility in allocating Local Property Tax in 2014 in the form of General Purpose Grants, with the priority to support those local authorities with weaker funding bases. This decision has been taken in the context of Budget 2014. The 2014 Local Government Fund General Purpose Grants will be announced shortly. It will be a matter for each local authority to determine how best to us e General Purpose Grant revenue in line with local priorities and circumstances; I have no plans to issue new guidelines or to make new regulations in that regard.

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.

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