LOCAL AUTHORITY charges for bin collection, car parks, swimming pools and commercial water provision are set to increase by up to 21 per cent from July because of changes in the VAT laws.
The Revenue Commissioners have written to all local authorities seeking lists of all goods and services they provide to the public or to businesses at a cost, so they can be assessed for VAT at either 13.5 or 21 per cent.
The change arises from a ruling last year in the European Court of Justice which found that Ireland was transgressing an EU directive by exempting public bodies, including local authorities, from applying VAT.
While all goods and services provided are being assessed by the Revenue Commissioners, those most likely to attract VAT are services which could also be provided by the private sector, such as household waste collection, off-street car parking, swimming pools and sports grounds.
However, Dublin City Council’s head of finance Kathy Quinn yesterday told councillors she had received correspondence from the Revenue Commissioners in recent days indicating that commercial water charges would also be considered for VAT, even though the council was the only supplier of water services to businesses in the city.
“What we’ve been told is that there doesn’t need to be existing competition, just that competition could be there in theory.”
If applied to the commercial sector water services VAT could be applicable to domestic water charges if they are introduced. Services which are part of a local authority’s statutory function, such as the granting of planning permission or the provision of social housing would be exempt Ms Quinn said.
The Revenue Commissioners had yet to inform local authorities which services would attract the 13.5 per cent and which would be subject to the higher 21 per cent rate of VAT, Ms Quinn said.
However, regardless of which rate was applied the costs could not be absorbed by the local authority, she said.
“There will be VAT charged in bills going out to commercial and domestic customers . . . The imposition of VAT on the service will result in a higher cost to the customer for the service.”
The biggest charge householders will face is likely to be the imposition of VAT on council bin collections. In Dublin city the current maximum annual bin charge most householders would face is €304. If VAT were applied at 21 per cent this would increase to €367.84.
For poorer households in receipt of waivers, who will be paying bin collection fees in Dublin city for the first time this year, their maximum bill would rise from €208 to €251.68.
Similar charges would be faced by householders in all parts of the State who use local authority services for their waste collection. However, those already using private waste operators would see no increase as VAT is already applied to their bills.
The VAT changes are due to be included in the Finance Bill 2010 published next March or April, and are likely to be implemented in 2010.
