The country’s largest local authority, Dublin City Council has confirmed to councillors that it will not see a share of the local property tax until 2015, reversing an earlier commitment by Phil Hogan to allow council’s retain 80% of the new tax.
The circular provided to Fianna Fáil Councillor Paul McAuliffe outlines the original commitment by Minister Hogan on the 12th March 2013 relating to his intention to allow councils retain 80% of the proceeds of the Local Property Tax. However the circular also highlights a press statement from Minister Hogan issued on the 16th of October 2013 which confirms that the funding model to replace the general purpose grant allocation has not been finalized and “Retention of a proportion of local property tax receipts at source will now commence from 2015 onwards.”
Criticizing the move Cllr McAuliffe said “the Minister has mislead people who have paid the charge believing it would lead to more money for local services. The Minister had made the commitment in March when he was desperate to see householders comply with the new charge. Fine Gael Backbenchers had made a great deal of fuss about increasing the council’s share from 65% to 80% however the Minister failed to reveal that he would not allow councils retain any of the first years collection.
While no local authority will be worse off next year 2014 the 80% retention will now only commence from 2015 onwards.
CIRCULAR ISSUED TO CLLR MCAULIFFE BY DCC FINANCE DEPARTMENT
|Oifis an Cheannasaí Airgeadais, An Roinn Airgeadais,|
|Oifigí na Cathrach, An Ché Adhmaid, Baile Átha Cliath 8, Éire|
|Office of the Head of Finance, Finance Department,|
|Civic Offices, Wood Quay, Dublin 8, Ireland|
|T. 01 222 2102/3 F. 01 222 2476 E. email@example.com|
|To each Member of Dublin City Council|
22nd October, 2013
I refer to the national budget as published on 15th October 2013. I set out a statement (Schedule A) from Minister Hogan from 12th March 2013 relating to the LPT and specifically to an intention to retain 80% of the proceeds of the Local Property Tax in each Local Authority Area. I also set out (Schedule B) an extract from the Press Statement from Minister Hogan issued 16th October 2013 advising that:
- The funding model to replace the general purpose grants allocation has not been finalised
- A system of general purpose grant allocation will continue in 2014
- No authority will be worse off next year (2014) relative to the current year (2013)
- Retention of a proportion of the LPT receipts at source will commence from 2015 onwards
Head of Finance & ICT
Minister Hogan confirms that the Local Authorities will retain 80% of the proceeds of the Local Property Tax collected in their own areas
The Minister for the Environment, Community & Local Government has today (12 March, 2013) confirmed Government has accepted, in principle, a policy position that from next year 80% of all Local Property Tax (LPT) receipts should be retained within the local authority areas where the properties are based and that these receipts should be utilised by those authorities in their local budgets. This will assist in the funding of new services such as the establishment of Local Enterprise Offices and other labour activation measures that will help create jobs
The remaining 20% of the LPT collected nationally will go to the Local Government Fund, which will continue to provide funding to local authorities on a needs and resources basis. This decision will not impact on the financial allocations of LAs from general purpose grants in 2014.“The needs and resources model has always been a feature of the funding disbursed from the Local Government Fund and that will continue to be the case. It recognises the fact that some local authorities with low population densities will not raise enough funding through the LPT and other local charges such as commercial rates,” said the Minister.
The introduction of the Local Property Tax (LPT) brings a new dimension to local government funding. As a supporting component of overall reform, it provides a new and very effective link between the provision of services at local level by local authorities and decisions on the funding of these. It is in keeping with the other measures the Minister announced in his policy statement “Action Programme for Effective Local Government: Putting People First” to maximise the role of elected members.
“The introduction of the Local Property Tax will provide a more sustainable funding model for local government, will devolve greater responsibility for financial decisions to the local level, and will help renew the relationship between the citizen and his or her local authority,” added the Minister.
The relationship between local government and the community it serves will be strengthened by the LPT. It is recognised international best practice that local services administered by local authorities should be locally funded.
From 2015 local authorities will be have the discretion to vary the LPT by up to or less than 15% and this will further strengthen the autonomy of local authorities.
The Govt also announced that it will establish an Inter-Departmental Group to consider and report on issues arising from the introduction of the LPT for local authorities.
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The Minister pointed out that 2014 will see major reform in the local government sector. The Action Programme for Effective Local Government sets out a wide-ranging reform agenda across local government to address weaknesses, enhance effectiveness and accountability, and improve performance across the entire system. Key features of the programme, to come into effect following the local elections in 2014, include the restructuring of local government at regional, county and sub-county levels and the strengthening and widening of the scope and role of local government. It will implement the most far-reaching changes since the present system of local government began in the 1890s.
“As the priority has been to get the model of funding for Irish Water right, and in particular ensuring that the Service Level Agreements to be put in place with local authorities provide sufficient funding for the delivery of water services in 2014 and beyond, we haven’t as yet been in a position to finalise the corresponding model to replace the system of general purpose grants to the Local Government sector. So while we will continue to operate a system of general purpose grants for 2014, I will not be losing sight of the critical importance of ensuring that no local authority will be worse off next year relative to the current year as a result of the introduction of the LPT and the transition to Irish Water, taking account also of efficiencies to be achieved, including through the public service reform agenda.
Retention of a proportion of local property tax receipts at source will now commence from 2015 onwards. This will provide greater discretion in local decision making and increased accountability at local level as key elements of the local government reform programme”, said the Minister.