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Commitment to Local Gov Reform
• Programme for Government , the Local Government Efficiency Review Group and the Report of the Local Government Alignment Steering Group……. Recognise and commit to the reform of local government
• Minister’s announcement awaited
Local Government Funding
• Key part of the reform of Local Government is the revision of funding sources
• Economic downturn further impetus for reform of local gov finanancing
Table 1: LGF 2006 - 2012
Year Local Government
Fund
€m
Change
€m
% Change
2006 877
2007 948 71 8.10%
2008 999 51 5.38%
2009 905 -94 -9.41%
2010 870 -35 -3.87%
2011 705 -165 -18.97%
2012 651 -54 -7.66%
2006-2012 -226 -25.77%
2008-2012 -348 -34.83%
Current Expenditure 2008 – 2012
2008 2009 2010 2011 2012 Reduction Change %
Gross Revenue
Expenditure
€5,224 €5,237 €4,847 €4,724 €4,482 -€742 -14%
Financed by
Commercial Rates €1,341 €1,403 €1,357 €1,366 €1,399 €58 4%
Government
Grants/Subsidies
€1,272 €1,255 €1,105 €1,129 €956 -€316 -25%
General Purpose
Grant
€1,000 €937 €774 €705 €645 -€355 -36%
Pension Related
Deduction
€0 €0 €79 €78 €79 €79
Goods and Services €1,600 €1,632 €1,518 €1,424 €1,380 -€220 -14%
Miscellaneous €11 €10 €14 €22 €23 €12
Gross Income €5,224 €5,237 €4,847 €4,724 €4,482 -€742 -14%
Revenue Expenditure by Division
-€31
-€270
-€9
-€68
-€249
-€76
-€93
€59
-€300m -€200m -€100m €0m €100m
Housing & Building
Road Transport & Safety
Water Services
Development Management
Environmental Services
Culture, Recreation & Amentity
Agriculture, Education, Health &
Welfare
Miscellaneous Services
Gross Revenue Expenditure Movement 2008 - 2012
What impacts Local Gov Finances ?
• Service providers
• Various functions
• Size and structure
• Local democracy highlights need to have smaller la’s , though larger la.s are often more efficient….
• Reform of Local Government finance constant policy issue since 1960’s…..
• 16 Reviews at least since the 1962 Economic Research Institute report ‘’ Local Government Finance in Ireland : A Preliminary Survey….
1985
The National Economic and Social
Council
The financing of Local Authorities.
Local Property Tax would improve local
accountability.
Widen the National tax base.
System of grants from Central government
should be continued to cover national services
at local level and to achieve an element of
equalisation.
1985
The Commission on Taxation
It reviewed the system of local government
finance.
It highlighted the importance of classifying the
services provided by local authorities as either
local or national. The Commission argued that
local services should be financed primarily from
local taxation.
1996
KPMG Report
A KPMG Report in 1996 for the Department of the
Environment, Heritage and Local Government
noted that Ireland had a highly centralised system
of financing of Local government .
In terms of funding options, the Report concluded that the
commercial rates base should be extended to include all
bed and breakfast accommodations and non residential
agriculture buildings.
It stated that there is scope to raise additional revenues
from Local Authority charges.
It suggested the introduction of a property tax as the
most feasible option to raise additional funding.
2005
Indecon Report
Highlighted the dependence of local Authorities on
commercial rates and central grants and recommended
a move towards more locally-based sources of funding.
Two key elements of this should comprise
Increase in local charges
Introduction of selected targeted local taxation
including a charge on second properties.
Commission on Taxation 2009
• Examined various options for the future financing of local government
• Seeks to change balance between nationally provided and locally collected sources of income from ratio 45:55 to 25:75
• Taxation of property (domestic and commercial) recommended as key source of local government income.
The Future ……
• Property Tax 2013……….?????
• EU/IMF Agreement….Household Charge a pre-cursor to full property tax.
• Provide stable funding base for LA’s