The Irish Hotels Federation (IHF) will today call for a reform of what it argues is an unfair system of local authority funding.

On the eve of its annual conference in Dublin today, IHF President Richard Bourke welcomed the publication last week of the Indecon consultant's report, but said it did not go far enough in recommending changes to the system of commrecial rates.

As well as favouring a shift in the burden of funding from business to non-business residents, the IHF is calling for a portion of corporation taxes and income taxes to be ring-fenced for local authority financing "an increase in corporation tax to 12.25 and a ring fencing of a portion of income tax would assist redress of the problem, which cost the commercial sector in excess of €1 billion last year."

Mr Bourke said that the present system of rates placed an unfair burden on hoteliers.

"The current commercial rates system is essentially a tax on the size of commercial buildings with no reference to income yields or other associated overheads. The nature of our business is that our hotels take up a large floor area which is not necessarily in proportion to the turnover that many other businesses operating from significantly smaller premises enjoy."

The Indecon report, commissioned by the Government, said that local authorities would need to find an extra €1.5 billion to pay for "existing and emerging demands". Their report called for a reform of local authority funding, with an increased reliance on local sources of finance including taxes on holiday homes and the extension of water charges to all properties. It also called for greater efficiencies in local government.