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Dr. Bríd Quinn.  Comhgháirdeachas ar bhúr gcéiliúradh 100 bliain  I want tp affirm your work for the citizens of your towns STRUCTURE OF PRESENTATION.

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Presentation on theme: "Dr. Bríd Quinn.  Comhgháirdeachas ar bhúr gcéiliúradh 100 bliain  I want tp affirm your work for the citizens of your towns STRUCTURE OF PRESENTATION."— Presentation transcript:

1 Dr. Bríd Quinn

2  Comhgháirdeachas ar bhúr gcéiliúradh 100 bliain  I want tp affirm your work for the citizens of your towns STRUCTURE OF PRESENTATION  Local Government finance ◦ 100 years of achievement ◦ Problems ◦ Possibilities & challenges BQ AMAI 2012

3  124 municipal councils....2012......2014?......  objectives of the AMAI defined as: ‘securing greater powers for municipalities and urban district councils to deal with every-day subjects affecting their localities.’  Prominent issues for municipal authorities 1912 ◦ Finance for social housing ◦ ‘Need to concentrate on municipal affairs and strictly avoid party controversies’ BQ AMAI 2012

4  The receipts for the purposes of local government in Ireland during the financial year 1912-13, excluding loans, and grants provided by Statute, and making the necessary amounted to £4,742,023, an increase of £18,533, as compared with the preceding year. Of this amount ◦ 73 per cent, was raised directly by rates assessed on lands, buildings, &c., ◦ 12 per cent, was derived from tolls, fees, stamps, and dues, ◦ 6 per cent, came from rents of property in lands, houses, &c., ◦ 9 per cent, was made up of various miscellaneous items of local income classed as other receipts BQ AMAI 2012

5 Reductions Demands Finance EU National Regulation Reduction New tasks Staffing For Municipal authorities – ??????? the future BQ AMAI 2012


7  “…functions often carried out elsewhere by sub- national Government tiers are the responsibility of local sections of national organisations in Ireland, e.g. primary education, health, social services and public transport” (Fitzpatrick Associates, 2006, 105).  “Ireland is one of the most centralised states in Europe with local government having few responsibilities and commensurate resources (2.2 % of tax revenues).” (European Commission, 2007 p167). BQ AMAI 2012

8  Minister Hogan  ‘[b]y international standards, the revenue base of local authorities in Ireland is relatively narrow, with local authorities being disproportionately dependent on central government funding’ (Dáil debates, June 28 th 2012). BQ AMAI 2012


10 ◦ on central government AND on commercial sector  Income from Commercial Rates rose from 25% (1999) to over 29% (2010)  In contrast, income from General Purpose Grant fell from 19.96% (1999) to 16.7% (2010). BQ AMAI 2012

11  19 of 26 county councils receive 50+% of funding from central government  ► disconnect between receiving services and paying for them  No objective basis for the allocation of government funding to county councils: BQ AMAI 2012


13 Country€ billion€ per capita % of GDP% of public expenditur e Denmark8815,87737.664.3 France228.73,52711.820.9 IRELAND10.72,3916.910.3 Poland53.11,39115.033.0 BQ AMAI 2012

14 Source: CoE, 2011

15 Tax Autonomy BQ AMAI 2012


17 Allocations € m 2010 € m 2011 % Diff Water Capital 508435-14% Housing Capital 880520-41% Combined Capital Allocations 1388955-31% BQ AMAI 2012

18 20082009201020112012ReductionChange % Gross Revenue Expenditure €5,224€5,237€4,847€4,724€4,482-€742-14% Financed by Commercial Rates€1,341€1,403€1,357€1,366€1,399€584% Government Grants/Subsidies €1,272€1,255€1,105€1,129€956-€316-25% General Purpose Grant €1,000€937€774€705€645-€355-36% Pension Related Deduction €0 €79€78€79 Goods and Services€1,600€1,632€1,518€1,424€1,380-€220-14% Miscellaneous€11€10€14€22€23€12 Gross Income€5,224€5,237€4,847€4,724€4,482-€742-14% BQ AMAI 2012

19 Ideal Tax autonomy structure  Taxes which are growth-enhancing at sub-national level are the same as the ones which are growth-enhancing at central level  But, there are some additional requirements : ◦ Link between taxes paid and public services received ◦ local t axes should be non-mobile  Non redistributive  Non cyclical  Tax base should be evenly distributed across jurisdictions ◦ So, how do they do it elsewhere? BQ AMAI 2012

20 Caveats in Comparison Caveats in Comparison  National & local contexts  Political system and structures  Role of local government (LG)  LG functions  Size and scale of LG  Terminology

21 BQ AMAI 2012 Denmark  Local income tax = c.50% of local income ◦ tax rates vary between local authorities ◦ limits agreed between CG and LG  local property/land tax  service charges  % of corporation grants  grants from central government

22 BQ AMAI 2012 The Netherlands  High level of transfers  decentralised responsibility & small degree of autonomy  restricted ability to raise extra resources  only about 10% is raised locally ◦ property tax ◦ service charges  annual ‘angst’  equalisation mechanisms  ‘specific’ grants for education, policing etc.

23  Conflict of principles? ◦ Local Autonomy v centrally set standards  Local income tax yields about 33%  ? Tendency to recentralise  Recent tension re equalisation  difficulties in assessing income & needs  review underway BQ AMAI 2012

24 Spain  Significant reform at all levels  Pactos locales  35% of LG income from taxation  mandatory taxes ◦ property tax ◦ business (fixed & variable elements)  Optional taxes ◦ construction taxes ◦ capital gains  significant state transfers (general and specific grants)  budget stability before recession

25 BQ AMAI 2012 What are the options for Ireland?  Increase transfers (? Also discretion)  Increase own resources  Both  HOW?  ‘Big bang’ or piecemeal reform?  One local tax or a ‘basket of taxes’

26 ‘The whole local authority model needs to be reworked to put them on a sound financial footing going forward as follows: ◦ voluntary redundancy program model implemented using a skills based approach to calculate sustainable staffing levels and detailed cost benefit analysis carried out; ◦ introduce pension fund mechanism; ◦ set up debt collection unit; ◦ introduce a Local Authority Clearance Certificate to ensure those who have not paid local taxes to not be able to receive state grants.’ From Grant Thornton Independent financial appraisal of Sligo County Council, August 2012 BQ AMAI 2012

27 Options  Taxation of property (domestic and commercial)  water and waste charges  a new system of planning fees  a review of housing rents.  local income tax  poll taxes/community charges  local sales taxes BQ AMAI 2012

28 Options........... Local Business Tax  Many variations  buoyant  Problems ◦ basis for assessment ◦ competition between LG units ◦ acceptability to business? ◦ Ability to pay ◦ Uneven distribution ‘Mixed Bag’  Spain, France & Belgium  reduces vulnerability  complex  tension between LG and CG  accountability issues

29 BQ AMAI 2012 Local tax options & issues PROPERTY TAX  simple option?  political implications?  Problems ◦ determination of bases ◦ lack of buoyancy ◦ social ‘blindness’ ◦ Unpredictability ◦ Administration issues LOCAL INCOME TAX  simple  equitable  Problems ◦ calculation local/national ◦ base determined nationally ◦ local and national tax policies not easily discernible to public

30 BQ AMAI 2012 Issues to be considered  Principles on which reform is based  Revenue raising potential  decision-making structures  ease of administration  transparency  needs & opportunities  social dimension  capacity  Political will ◦ national - increased discretion ◦ local - make tough decisions  attitudes ◦ public - willingness to pay ◦ political - willingness to take responsibility

31  “annual budgetary allocations to local government are only to a small extent based on objective criteria such as population or tax base per capita.”(OECD, 2008, 246) BQ AMAI 2012

32  Reform of local government will only succeed if it is part of a broader reform of the public service  Different services are best delivered at different scales  We need structures that reflect settlement patterns and have capacity for revenue raising that will endow units of local government with the capacity to prioritise and deliver services effectively and equitably BQ AMAI 2012

33  Should we continue to have town councils for which less than 1/5 of the population has a vote?  BUT what are the alternatives? ◦ Widening of the town council model to all towns ? ◦ Abolition of town councils and replacement by revamped Area Committees? ◦ Total reconfiguration of our local government system to a system of population-related connected models at area, district and regional levels that are a vehicle for delivering ALL public services via a streamlined, strategic system BQ AMAI 2012

34  As local representatives, councillors need to be ready to take hard decisions, adopt an objective rather than clientilist attitude to implementation and evaluation of policies  You have the mandate to lead the way in achieving and effective, efficient and equitable system – ◦ engage in debate and deliberation ◦ Gather the evidence ◦ Lead the change - local government has led the way in the efficiency drive (840 million) - let it also be pro-active in achieving a system appropriate to 21 st century needs. BQ AMAI 2012


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