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Local Government Finance . Dr. Bríd Quinn. 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. 1912.

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Comhgháirdeachasarbhúrgcéiliúradh 100 bliain

  • I want tp affirm your work for the citizens of your towns


  • Local Government finance
    • 100 years of achievement
    • Problems
    • Possibilities & challenges

BQ AMAI 2012

  • 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

lg receipts 1912 eppi
LG receipts 1912 (EPPI)
  • 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

2012 issues
2012 issues

For Municipal authorities – ??????? the future

BQ AMAI 2012

centralisation of public service delivery
Centralisation of public service delivery
  • “…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


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 28th 2012).

BQ AMAI 2012

local government d ependent
Local Government dependent……..
  • 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

dependence on central government for funding
Dependence on central government for funding
  • 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


Source: CoE, 2011

BQ AMAI 2012

tax autonomy
Tax Autonomy

BQ AMAI 2012

declining income
Declining income

BQ AMAI 2012

ideal tax autonomy structure
Ideal Tax autonomy structure

BQ AMAI 2012

  • 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
    • localtaxes should be non-mobile
      • Non redistributive
      • Non cyclical
      • Tax base should be evenly distributed across jurisdictions
    • So, how do they do it elsewhere?
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


BQ AMAI 2012


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

BQ AMAI 2012

the netherlands
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.

BQ AMAI 2012

  • 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


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

BQ AMAI 2012

what are the options for ireland
What are the options for Ireland?

Increase transfers (? Also discretion)

Increase own resources



‘Big bang’ or piecemeal reform?

One local tax or a ‘basket of taxes’

BQ AMAI 2012

assessment from an observer
Assessment from an observer

‘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


BQ AMAI 2012

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


Local Business Tax

Many variations



basis for assessment

competition between LG units

acceptability to business?

Ability to pay

Uneven distribution

‘Mixed Bag’

Spain, France & Belgium

reduces vulnerability


tension between LG and CG

accountability issues

BQ AMAI 2012

local tax options issues
Local tax options & issues


simple option?

political implications?


determination of bases

lack of buoyancy

social ‘blindness’


Administration issues





calculation local/national

base determined nationally

local and national tax policies not easily discernible to public

BQ AMAI 2012

issues to be considered
Issues to be considered

Principles on which reform is based

Revenue raising potential

decision-making structures

ease of administration


needs & opportunities

social dimension


Political will

national - increased discretion

local - make tough decisions


public - willingness to pay

political - willingness to take responsibility

BQ AMAI 2012

ireland inc
Ireland Inc.
  • “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

where do we go from here
Where do we go from here?
  • 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


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


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 21st century needs.

BQ AMAI 2012

ITIt’s about more than taps and taxes ! It’s about people’s quality of life.You have the power to make change happen...Go n-eirilibh

BQ AMAI 2012