Dublin council proposes sales tax and hotel bed tax

Dublin City Council has proposed a sales tax and a hotel bed tax to fund local councils.

Dublin City Council has proposed a sales tax and a hotel bed tax to fund local councils.

In a detailed submission to a Government review of local government funding, the council has suggested that a proportion of the current VAT take in a local authority area should be ring-fenced to fund the local council.

It comes as the city manager, Mr John Fitzgerald, said that the current system, which was one of the most centralised in Europe, left local authorities with little financial independence and no choice but to go "cap in hand" to Government.

The council's proposals, which were agreed last week, suggest that the local sales tax would replace the current local government fund, which finances a considerable part of council spending at present.

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The fund, along with other central Government funding, including roads, sewerage and other schemes, provides the majority of current and capital spending for local councils at present.

The only discretionary fund-raising mechanisms for councils at present are development levies, commercial rates and, in some cases, refuse charges.

"The tourism industry draws heavily on the city's infrastructure and environment," the report said.

"There is no direct funding source for expenditure allocated to support tourist-related activities. This charge has already been introduced elsewhere in Europe and the USA."

Cllr Michael Donnelly, the chairman of the finance committee of the council, which drafted the report, said the proposal for a sales tax would mean that areas that were "economically buoyant" would get greater income.

Mr Fitzgerald said he fully supported the report and believed the public would be able to directly link the taxes they pay with the spending decisions made by their council.

Dublin City Council's annual budget now stands at nearly €700 million, with 32 per cent coming directly from Government. It is also spending an additional €1 billion a year on infrastructure projects, virtually all financed by central Government.

"It's not just about tax. It's as much to do with the whole debate about local government, local democracy and lots of people who want a lot of things but who don't want to confront the issue of how we're going to pay for them," he said.

He believed that had there been a local tax system in the past, Dublin would have facilities like a conference centre, as the city council would have been able to make the decision.