Local government funding in Ireland: Contemporary issues and future challenges

Abstract

The years since the 2008 financial crisis and subsequent economic crash have witnessed significant changes to the funding of the local government system in Ireland. This paper outlines these developments, while, at the same time, exploring some of the most important future challenges relating to the financing of Irish local authorities. The dominant local government revenue issues of the last decade outlined here are fiscal autonomy and the balance between own-source income and central government grants, income differences between urban and rural councils, the Local Property Tax, changes in commercial rates and fiscal equalisation. In terms of fiscal dependency and equalisation, our findings show reductions in the vertical and horizontal fiscal imbalances in the Irish local government system. Likely future challenges include the need to re-examine the balance between business taxes and non-business taxes, funding the expected growth in metropolitan areas and the financing options for capital investment by local authorities, including consideration of municipal bond issuance for the Greater Dublin Area.

Keywords

• local taxation
• intergovernmental grants
• fiscal imbalances
• fiscal equalisation
• municipal bonds