Taxpayers face a raft of new local authority VAT increases
TAXPAYERS are facing VAT charges on a host of local authority services including library internet access and photocopying, it has emerged.
Last week, Finance Minister Brian Lenihan announced the introduction of a new VAT system affecting bin charges, leisure facilities and off-street parking in the Finance Bill.
Now a Department of Environment circular reveals the full extent of the new system and shows how it could go substantially beyond these three basic areas, taking in a host of services by local authorities.
Services ranging from housing loan applications, valuation certificate charges, house valuations, homeless accommodation charges, rental income, loan application fees, repair loans maintenance and mortgage allowance also feature in a Department of Environment circular on the new VAT system.
All the 34 services listed -- in a circular seen by the Irish Independent -- will now have to be reviewed to decide if they fall outside the scope of VAT, if they are taxable or if they are exempt.
It is clear, however, that waste, including bags, tags, wheelie bins and landfill, will now be subject to a charge of 13.5pc. Water and waste water provision is exempt. But testing and analysis of water samples attracts VAT at 21pc.
Car parking, library internet access, library photocopying and advertising space will all incur a charge of 21pc.
VAT is being introduced on these services in July following a European Court of Justice (ECJ) ruling earlier this year which concluded that the VAT exemption for Irish local authorities was giving them an unfair advantage over private operators.
Last night, during a Dail debate on the Finance Bill, Fine Gael's Richard Bruton claimed households across the country were already "on their knees" before the new VAT system was announced. He estimated that the changes could cost the average user more than €200 per year.
Labour's Joan Burton claimed there was a "double whammy" in relation to service charges, such as waste collection, for which income tax relief will be abolished from next year.
"This relief is given a year in arrears. Service charges paid in 2011 can be claimed against income tax in 2010, but the relief will be completely abolished from 2012," she told the Dail.
Major local authorities such as Dublin City Council, Cork City Council and Galway City Council have begun the lengthy process of drawing up a list which must be returned to the Government by this Friday.
However, it remains unclear how much prices will increase by because local authorities will be able to claim some of the VAT back.
Social and Family Affairs Minister Mary Hanafin has urged local authorities to be "sympathetic" to social welfare recipients when setting the rates for refuse charges.
"A lot of the local authorities have a waiver system and they include maybe not all people on social welfare but they do support people who are totally dependent on social welfare, particularly pensioners. I would ask them to be sympathetic to that," Ms Hanafin said.
According to the government circular, the Attorney General has advised the Department of Finance that water and waste water charges will continue to be exempt from VAT.