LOCAL AUTHORITIES will in time be given powers to set their own property tax rates in order to generate funds to support provision of services in their areas, Minister for the Environment Phil Hogan has said.
The development, announced by the Minister at the publication of a programme of local government reform, would give county councillors power to set the tax at a level that meets financial needs. This was the case under the domestic rates system that was abolished in 1977.
“Property tax will become more and more the source of income for local authority services to be funded,” said Mr Hogan. “If they are raising the money locally for service provision, they will have a say in how they spend it. Each local authority can have a different level of property tax in due course. The timing of that is a matter for Government.”
The tax, expected to be levied at an initial rate of 0.25 per cent of the property value, is to be announced in the December 6th budget and is likely to come into force in the middle of next year. The details of the levy, which is to be collected by the Revenue Commissioners, are yet to be approved by Cabinet.
Mr Hogan was speaking at the publication of Putting People First, a programme of local government reform which he said represented the most radical changes to local political structures since the 19th century.
The abolition of 80 town councils, a reduction in the number of local authorities to 31, and a proposal to reduce the number of elected councillors by 42 per cent to a maximum of 950, are among the measures set out in the plan.
It indicates that the role of elected councils should be extended to cover matters such as local economic development and the support of businesses. But it also states that the power of councillors to overturn the decisions of planning officials should be removed. Many of the changes outlined in the plan are to be in place for the 2014 local elections.
Mr Hogan said the document provided a “recognition” of the shortcomings in local government, which he said was no more than people should expect at a time when they were being asked to pay for local services through the €100 household charge. He said it was not sustainable that €4 out of every €10 spent by local government came from the Exchequer.
He added that best international examples suggested local services should, as far as possible, be locally funded, and that was the rationale for the property tax.
The decision in 1977 to cut the link between local taxes and services by the then government was “disastrous” and the cause of much of “the malaise” in local government today.
Mr Hogan warned that services in local authority areas where the collection of the property tax was below target would likely suffer – as has been the case with the household charge – alluding to his decision to suspend payments from the local government fund to some local authorities in the third quarter of this year.
“I would be hopeful that [politicians] who have advocated to their local citizens not to pay this particular tax will defend now the decisions that have to be made in curtailing services because the money is not there,” he said.
