Annual water payment would average €500 per home by 2014

WATER CHARGES:DOMESTIC WATER charges should be introduced as "a sustainable approach to realising an acceptable conservation culture", the commission said.

Water charges, which would cost the average household about €500 a year in 2014, would raise €450 million a year for local authorities, it reported. Another €58 million would be raised by recovering the full cost of water services from commercial users.

For the first time, commercial rates would be charged in full or in part on larger BB operations, offshore windfarms and third-level colleges. Planning charges and the landfill levy would be increased.

The report said all of the revenues from an annual property tax should be used to fund local government. It pointed out that Ireland was one of the few countries not to impose a property tax for this purpose. While the tax would be collected nationally at first, it was proposed that by 2014 local authorities would enjoy the power to set the rate locally.

The report came out against alternative methods of funding, including a local income tax, a poll tax or community charge and a local sales tax. It said the current tax relief on service charges should be abolished.

Chambers Ireland welcomed the proposals for a property tax and water charges, and said these would give a broader sustainable revenue base for local authorities.

The extension of commercial rates would apply to BBs with four or more bedrooms, as well as self-catering apartments and holiday homes provided by tourism operators; the report said it was “particularly anomalous” that such accommodation run by hotels is not subject to rates. This would raise €3 million a year.

The report said third-level colleges and community halls should be part-rated to reflect the fact that they generated significant funds from their own resources and carried out commercial activity on campus; this would raise €10 million.

The exemption from rates of agricultural land and farm buildings would remain, except for corporately-owned farm buildings, which would pay commercial rates. State-owned buildings are exempt from rates, but the Government makes a contribution in lieu to the Local Government Fund.

The implementation of water charges would pose a considerable challenge for local authorities, the report said. The cost of providing local water services in 2007 was €394 million. “The difficulty with the current policy approach is that it does not give the appropriate signal to homeowners that water is a resource which is costly to treat for drinking, and even more costly to treat as waste water before it can be put back into the environment.”

The commission said this approach was unsustainable, and that charging domestic users must form part of a revised approach. It pointed out that anyone could install a swimming pool and access water for free; “in our view, this is hardly a core public service”.

With water meters estimated to cost up to €450 million to install nationally, it said users needed to be incentivised by a reduction in charges at the time the meter was installed. Meters would be compulsory on all new housing units.

The report suggested that water charges be phased in. Initially, they would be set at a low flat basic rate, and increased gradually. Per-unit charging would be applied once meters were installed.

On waste charges, the report backed the current “polluter pays”principle, and said landfill levies should rise to encourage people to divert more waste from landfill.

Waivers from water and waste charges would apply for all customers unable to pay.