independent

Wednesday 16 April 2014

Taxman could be used to chase €770m council debt

FAMILIES and businesses face being chased by the Revenue Commissioners for unpaid rents, loans, rates and water charges.

Environment Minister Phil Hogan aims to bring in legislation allowing the taxman to collect debt owed to local authorities, which are now owed more than €770m.

And it is understood the Government is actively considering plans to extend the powers of the Revenue Commissioners to collect a range of other state taxes and levies. These would include the mooted broadcasting charge, court fines and HSE fees.

Speaking to the Irish Independent, Mr Hogan said the move was being considered for local authorities amid major concerns about historic levels of arrears and the failure of councils to collect outstanding monies.

He said it was "very unfair" that some companies and individuals refused to pay their bills. While arrangements were being made to allow debts to be repaid over time, city and county councils could not live on "fresh air".

The precarious state of local authority finances is revealed in a series of local government audit reports obtained by the Irish Independent.

They show that €293m is owed in unpaid commercial rates, around €50m in housing rent and €100m in commercial water charges, €26m for refuse and €25m in housing loans.

In addition, €294m is owed in development levies -- bringing the total to €773m.

"As far as I am concerned, there is a reluctance by some local authorities to pursue debt," said Mr Hogan. "It's very unfair for companies and citizens who are paying.

POWERS

"I'm looking at Revenue powers, or an agency-based system, where companies would be enlisted to help collect debt. There could be a role for the Revenue in collecting these, they're good at it. They're the best agency and I've no problem looking at them collecting on behalf of the State.

"I'm also at the early stages at looking at what powers we can give local authorities. I think local authorities have shown great flexibilities to help companies pay what's outstanding to them, but they cannot live on fresh air.

"It's all taxation to deliver local services. Debt that is owed is collectable," he said.

Another option being considered is to give city and county councils Revenue-style powers to collect the money themselves, which could include allowing them to attach debts to earnings and other sources of income.

Published figures from local authorities show that some €478m is owed by families and businesses in unpaid rates, housing rents and loans and water charges.

In addition, another €294m is due in development levies to just nine councils, much of which is unlikely to be collected.

Mr Hogan said councils would undertake an exercise next year to see how many of these companies owing levies were still in existence and how much could be collected.

"I will be asking local authorities in the new year to look at what companies have the outstanding debts and see what's possible to collect and what's not," he said.

"There will be a determined effort to find out the real level of debt, and not just paper debt. We need to have a real view of what is collectable."

The audit reports show the serious pressure councils are under to make ends meet, and concern from auditors about how they are conducting their business.

The reports show spending of more than €125m on two waste projects -- Fingal County Council spent €31m on a massive landfill in north Dublin at Tooman Nevitt, which has since been cancelled, while Dublin City Council has overseen spending of €95m on the controversial Poolbeg incinerator.

While there are problems collecting money, there is also a failure to go to the market to seek best prices before goods and services are ordered.

Some 66pc of all purchases in Donegal (23,000 items) were only approved after they had been delivered.

Auditors also express concern about how assets are being legally registered, saying that in a number of cases it is not clear if the council holds title.

This is particularly important in relation to water assets including plants and pipes, as Irish Water is expected to take control and ownership of of the network from January 1 next.

The figures show it will have to collect €100m in unpaid water charges, with the most recent figures suggesting just 55pc of charges across all local authorities are paid.

Paul Melia

Irish Independent

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