Chambers call for property tax to fund services

Local government charges now exceed insurance costs for most businesses, the Chambers of Commerce of Ireland (CCI) said yesterday.

The organisation has called for the introduction of a new site tax on all property in the State, excluding primary domestic dwellings.

The new tax, which the chambers say could bring in €2 billion a year, would replace commercial rates and be revenue neutral. It would be compensated for by reductions in income tax and the near abolition of stamp duty.

At the publication of a report entitled Local Authority Funding - Government in Denial, CCI chief executive Mr John Dunne said the Government had, in recent years, overseen huge increases in the cost of delivering local authority services while at the same time failing to provide the necessary funding, and constraining the ability of local authorities to raise revenue.

"The net result, over the past five years, is that local authority revenue from business has almost quadrupled from €500 million to €2 billion," he said.

The recently disclosed 7 per cent shortfall in corporation tax receipts is, he said, a "leading edge" suggestion that the size of the take from business by local authorities, is hitting the profitability of Irish small and medium-sized enterprises.

He said commercial rates currently generate about €1 billion a year from 8 per cent of the property base. Overall, business funds 50 per cent of current expenditure by local government.

The introduction of a property tax that would hit second homes, derelict sites and development land would provide an incentive for the more efficient use of what are national resources, he said.

A chart contained in the report shows that Sligo Borough Council has the highest proportion of income from commercial rates as a percentage of overall income. Forty-three per cent of its income comes from commercial rates. Dún Laoghaire/Rathdown county council came second, with 39.5 per cent of its income coming from commercial rates.

Mr Dunne said the service charge base should be broadened so that all "polluters" or users paid for local authority services. The "polluter pays" principal was a good one but the Government is "too chicken" to adopt it. It was "outrageous" that domestic water charges were not being imposed.

He said there was an inability to pay provisions for people in domestic dwellings, though no such inability to pay provisions existed for business in relation to local government charges.

He also called for increased transparency and accountability from local authorities and for substantial efficiency savings through structural reform. He suggested that local authorities could make greater use of centralised support services, and that smaller authorities could have a shared manager.

Stamp duty payments people face when buying even a modest home is causing inefficiency in the housing market because it causes people to decide against trading down, he said.