Roche rules out water charges and second-home tax

Minister for the Environment Dick Roche has ruled out the introduction of water charges for householders or a tax on second homes to fill a gap in local authority finances.

Mr Roche made the pledge as he published a report this morning carried out by independent consultants Indecon. The study reports that local authorities face a shortfall of between €1 billion and €2 billion by 2010, a gap they say needs to be filled in part by increased contributions from the general public.

However, Mr Roche rejected these key findings. "Some of the revenue-generating options identified by the consultants run counter to current Government policy," he said. "The Government, therefore, does not support the recommendations to introduce domestic water charges or to impose a new tax on non-principal private residences".

The business and employers group Ibec said Mr Roche had missed an opportunity to bring about radical reform of local authority funding by ignoring the key recommendations of Indecon.

Its director of enterprise Brendan Butler said: "Local authority charges are inconsistent, inequitable and place a significant burden on all Irish business.

"The business community accepts that it must pay for services provided but it is no longer prepared to pay for services provided to other sectors of society."

Mr Roche said the the present system of funding local government has "served us particularly well, and has placed local government in a much better financial position than in the past.

"However, local authorities face increasing expenditure in meeting the needs of our expanding population, our growing economy, associated social and quality of life expectations, and higher environmental standards.

Mr Roche said that with "prudent use" of funding and the "pursuit of further efficiencies and expenditure rationalisation" local authorities should have adequate resources for "2006 and beyond."

He also said he is introducing legislation this year to generate more than €15 million per annum for local authorities by making new properties liable for rates as soon as they are valued by the Valuation Office. He added that he taking action to clamp down on motor tax evasion.

He added: "To support competitiveness in the economy and protect the interests of communities, I asked local authorities to exercise restraint, to the greatest extent possible, in setting any increases in commercial rates and local charges for 2006.

"Local authorities responded positively to this and a noticeable feature of the local councils' budgets for 2006 was the modest level of rate increases generally compared to previous years "

• a significant increase in the level of resources available to local authorities over the period to 2010.
• a significant change in the system of local government financing, with a move towards more locally based sources of funding.
• changes in the system of local government should be directed at increasing the share of local authority expenditure that is funded locally.
• the extension of water charges on an equitable basis. In particular, the introduction of water charges on non-principal private residences and water metering on all commercial properties.
• the introduction of mechanisms to secure a contribution to local authorities' general funding requirements from non-principal private residences and from commercial buildings not currently covered by commercial rates.