Firms to be hit hardest by council funding reforms
Published 25/11/2010 | 05:00
LOCAL authorities will be funded solely by local taxes and charges for the first time.
But this means homeowners and businesses will be forced to pay more for basic services.
Until now, the councils have been funded by central government, mainly through the Local Government Fund and cash from motor taxation.
But this revenue stream is being abolished in favour of local property taxation and water charges.
And those businesses located in prime city-centre locations will be hardest hit.
Commercial rates will be calculated based on the value of the site, instead of a charge based on the size of the premises. This means businesses in counties Dublin, Cork, Waterford, Limerick, Galway and Sligo could end up paying more than those in rural areas.
The new property tax will hit homeowners the same way.
The plan involves ringfencing the money from businesses and homeowners to bankroll county and city councils.
"For full implementation of the tax, commercial rates will be moved to a site value basis also," according to the plan.
Sean Murphy, Chambers Ireland deputy chief executive, said all revenue raised by the introduction of the site value tax in 2012 must be reinvested into local services.
This should follow the principle already established with the tax on second homes, all of which goes to the relevant local authority.
He warned that the value of many commercial properties had gone down significantly during the downturn and that this would be reflected in the new valuation method for rates.
Dublin Chamber chief executive Gina Quin said the site value tax should ensure that all households contributed to the running of local government.
"Taxpayers would then be more concerned about the efficient running of local government and hold their elected local representatives accountable when their money is misused," she said.
Overall, the Department of the Environment will save €311m over the lifetime of the plan, with the local authorities receiving €62m less a year.
This will be made up by the introduction of local charges.
Next year the department budget will be cut by €91m.