BUSINESS GROUPS want about €100 million in savings on local councils’ wage bills to be used to cut rates and other charges that have been driving up costs.
Local government staff are subject to the 8 per cent average pay cut for the public service announced by Minister for Finance Brian Lenihan in December’s budget.
The Government is planning to “split” the savings with the local authorities on a 65/35 basis, with city and county councils getting 65 per cent of the savings generated.
Businesses want to see local authorities returning the bulk of these savings to the economy in the shape of a reduction in the rates that councils levy to raise cash to fund their services.
Most the Republic’s business lobby groups, including Ibec, the Irish Small and Medium Enterprises association (Isme) and chambers of commerce raised the issue in their pre-budget submissions.
According to figures supplied by the Government to Isme, in 2007, the last year for which details are available, total local authority current spending in the Republic came to €4.7 billion.
Of that, businesses contributed €1.244 billion in rates. While the Government could not provide up-to-date figures, 65 per cent of the savings that will be made on the wage bill would be in the region of €100 million, or 8 per cent of the business community’s 2007 contribution.
According to Department of the Environment figures, in 2008, the Republic’s 32 local authorities paid €1.8 billion in wages. An 8 per cent saving on this comes to €148 million; 65 per cent of that figure comes to €96 million.
The Government cannot dictate what use each local authority makes of the savings that are passed on as it cannot tell councils how to spend the money they receive from central funds.
Dublin City Council has already said it plans to cut its rates by 2 per cent on last year.
Cork County Council, one of the Republic’s biggest local authorities, has said it will not increase its charges and left rates untouched in 2009.
Yesterday, Isme chief executive Mark Fielding said the Government should pass all savings on local government wages back to the councils. “Local authority savings should stay with local authorities,” he said.
Mr Fielding pointed out that businesses had been carrying more than their fair share of local government funding for several years.
He estimated that rates for businesses around the Republic increased every year by between 4 per cent and 6 per cent, depending on their location.
“When you’re the only person paying, you’re going to be paying more than your fair share,” he said.
Mr Fielding added that his group favoured spreading the burden through the introduction of a property tax and domestic water charges. “We need to broaden the tax base,” he said.
He said domestic water charges would have prevented the shortages that struck many parts of the State this week, which councils blamed on householders running taps to prevent pipes freezing up.
