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Sunday 28 May 2017

Analysis: Scrapping water charges will come with a heavy price tag

The State already pays around €500m a year to Irish Water to fund day-to-day operations. This will now increase by another €275m (Stock picture)
The State already pays around €500m a year to Irish Water to fund day-to-day operations. This will now increase by another €275m (Stock picture)
Paul Melia

Paul Melia

Anyone under the impression that scrapping water charges will not impact on public services is sorely mistaken.

There is a price to be paid - Irish Water is projected to collect around €275m this year and next in domestic charges. If, as is expected, the charges go, the shortfall must be met from general taxation.

That means less money for roads, schools, healthcare and other services. The €275m figure equates to almost €60 being taken from every man, woman and child in the country to replace the hated charge.

Many of those are people living in rural Ireland, who already pay for their water through group water schemes and private supplies. They will be penalised on the double - they will continue to pay for water locally and their taxes will be used to subsidise a free supply.

It might be politically expedient for Fianna Fáil, Sinn Féin and other anti-water politicians to scrap the tax, but it's worth noting more than 60pc of households did pay the bills.

The State already pays around €500m a year to Irish Water to fund day-to-day operations. This will now increase by another €275m. The prospect of cuts in income tax rates for middle-income families will move further away as a result.

The sums involved in supplying water are huge. Irish Water needs €8bn between 2017 and 2021, made up of €3.9 billion to complete the €5.5 billion capital investment programme, and the remainder to fund operating costs.

The Dáil committee on the future funding of domestic water services will sit until April 14, and will have to grapple with a number of issues.

They include how the utility will be funded, and addressing how Ireland will meet its obligations under the EU Water Framework Directive and, in particular, the 'polluter pays' principle.

But in the absence of a charge, what incentive is there to save water?

The committee has sought legal advice on amending 2007 legislation which would allow for those found to be wasting water to be penalised. This may allow Ireland to meet its obligations.

But defining what a polluter is may prove difficult. There is no definition set out in legislation.

People will pay for water one way or another, either through a charge or general taxation. What is lacking in the debate is consultation with the wider public about what is the better way.

Irish Independent

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