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Taxpayers face hike in charges to cover council debts of €680m

HOUSEHOLDS face higher charges to help prop up struggling councils now owed more than €680m by businesses, property developers and households.

The appalling state of council finances is revealed in a major report by the Department of the Environment, which shows €499m is owed in unpaid water charges, rates and housing rents. This amount has gone up by 20pc in a year.

And the report by the Local Government Audit Service also reveals that developers owe another €185m to city and county councils, and that 19 of the State's 34 local authorities are in the red.

The figures mean that householders will be forced to pick up the tab for councils that fail to collect the money owed -- through a raft of extra charges, including the property tax and water charges.

Local authorities have been warned since 2008 to get their budgets to balance, but the report shows that many are still spending more than they take in and are failing to collecting outstanding monies owed.

It reveals:

• €160m is owed in unpaid water charges, an increase of €8m. Twelve of the State's 34 local authorities collect less than half of what's owed, with the lowest collection rates in Clare (33pc) and Louth (34pc).

• €47m is owed in unpaid rents. The lowest collection rates are in Dun Laoghaire-Rathdown, Mayo, South Dublin, Dublin City and Galway City, where one in five tenants is currently in arrears to the council.

• Homeowners who bought a house through council mortgages owe another €24m in outstanding payments, up €6m.

• Councils were owed €268m in unpaid rates at the end of 2010, the most recent year for which figures are available, an increase of €80m in just a year.

Commercial rates are one of the biggest sources of local government funding, comprising 26pc of all income, or €1.2bn a year.

The figures show that just 81pc of all rates are collected, but one in three businesses in Donegal, Louth, Galway city and Limerick city owe money.

Auditors from the Department of the Environment visit each of the country's 34 local authorities every year, and conduct an in-depth trawl of their finances to ensure that income and expenditure are being properly recorded and value for money achieved.

The report raises serious concerns that councils are not writing off bad debts because of the effect it would have on their balance sheets.

"Local authorities should implement a realistic write-off policy in respect of amounts due to them," it says.


Chambers Ireland said the unpaid bills from businesses reflected the pressures they were under.

"We'd expect our members to pay their rates and water charges, but the (collection of) rates are reflective of what's happening in the economy," Chambers Ireland deputy chief executive Sean Murphy said.

"It unpins the case to focus on costs and to help businesses stay open. It's symptomatic of what's happening in the wider economy."

City and county managers plan to overcome these issues by selling land, collecting development levies, using surplus money if available to pay off the amount owed, and seeking additional funds from the department.

Irish Independent