Local authorities funding comes from rates, government grants and services. The annual rate is based on the residual sum, being the deficiency in funds in the authority’s budget, which is not met from expenditure, state grants, local authorities, own resources.
City and county councils are empowered to make rates. Town councils which were former Urban District Councils and Borough Councils, had power to levy rates.
Domestic rates were discontinued under the Local Government Financial Provisions Act 1978. The Supreme Court in 1984 held that the system of valuation of agricultural rates was unconstitutional. It was based on too arbitrary a valuation in reference to the historical Griffith Valuation only. Local authorities are being paid a grant in lieu of agricultural rates.
In 1999 a working group on the reform of rates was established. Its main recommendation included re-enactment and modernisation of legislation;
- standardisation of rating law and practice across all authorities; liability to remain with the occupier;
- statutory right to pay by instalments;
- interest to accrue on outstanding rates;
- vacancy charge 50%;
- rate only challengeable by judicial review;
- rates to be within the tax clearance certificate system.
The Local Government (Financial Provisions) (No. 2) Act, 1983 empowered local authorities to impose service charges for water, sewage and refuse services.
The imposition of service charges was made a reserved function in 1985. A number of cases challenged the imposition of specific service charges, in which it was held that the charges must be specifically related to particular services. In some cases, a charge is not permissible, unless the service is actually provided to the individual concerned.
Other cases held that charges could not be imposed for general public rights, such as the right to connect drains into the sanitary authority’s sewers. An attempt to collect refuse charges under the provisions which enable local authorities to make the requirements regarding the presentation of waste (requiring particulars showing payment) was held invalid, as it was not intended to be a charging provision. The charge was collectible but the authority could not refuse to collect the bin.
Local Government Fund
The Local Government Act 1998 provided for payment of motor tax revenue to local authorities. It established the local government fund. The Minister manages and controls the fund. The fund consists of such accounts as the Minister may determine.
As soon as may be after the end of each financial year, the Minister shall submit the accounts of the fund to the Comptroller and Auditor General. The Minister shall cause an abstract of the accounts together with the report of the Comptroller and Auditor General to be laid before each House of the Oireachtas. The Minister shall cause the Local Government equalisation fund to be wound up.
The amount of payment into the fund was specified in the base year and may be amended from time to time. The fixed amounts were to be increased by inflation in the absence of legislation otherwise.Certain fees and functions are to be funds of the local authority including duties payable in respect of motor vehicles, motor vehicle testing and licensing fees.
Notwithstanding any other legislation, they were to be paid into the fund by each local authority, the amount of motor vehicle tax, driver licence duties and miscellaneous fees collected in each year.
The Minister may authorise payments out of the fund to the local authority of such amounts as he determines for the purpose of defraying expenses incurred by them in performing their functions.
Borrowing of money requires ministerial sanction as does lending money to other local authority.
The Water Services Act 2017 provides that the Minister for Finance is to pay into the Local Government Fund the local property tax collected during the financial years 2014 to 2017. Commencing with the year 2018, the Revenue Commissioners shall pay directly into the Local Government Fund an amount equivalent to the local property tax received by them, including any interest or penalties.
The Minister for Transport, Tourism and Sport can issue directions in relation to the collection of motor tax. From 1 January 2018, all motor tax collected by the Minister for Transport, Tourism and Sport shall be paid into the Central Fund. Motor tax collected by local authorities shall be paid to the Minister for Transport, Tourism and Sport.
The entire network used for the provision of water services by Irish Water or a person who holds a water services licence or land and buildings occupied by Irish Water or such a licence holder is rateable.