THE contentious Residential Property Tax as well as water and sewerage charges are to be abolished by the Government, raising speculation that a general election is now likely early next year.
Following a lunchtime Cabinet meeting yesterday, the Minister for the Environment, Mr Howlin, confirmed that the Government had agreed to get rid of domestic water and sewerage charges, which raise £53 million annually, and to assign the proceeds of motor tax to local authorities instead. The controversial taxes are to be dropped from January 1st.
Surprisingly, Mr Howlin remarked during the course of a press conference to announce his new programme for the reform of local government that the Residential Property Tax would also be removed, but that this would be officially declared later by the Minister for Finance, Mr Quinn.
In a statement issued later in the afternoon, Mr Quinn confirmed the removal of the RPT, which yields an estimated £15 million a year, with effect from the next valuation date, April 5th, 1997.
The Government had also decided, he said, to increase the existing 6 per cent stamp duty to 9 per cent on residential properties valued at £150,000 and over. This is to be introduced by means of a financial resolution in the Dail on Budget Day - January 22nd - and will take effect from midnight on that date. It is expected to raise an additional £14 million in a full year.
The new rate will apply to the conveyance or transfer on sale of second-hand residential property.
Detailing plans to remove water and sewerage facilities taxes Mr Howlin also confirmed that the annual Rate Support Grant of £193 million, which the Exchequer pays to local government will be phased out. The £258 million raised in motor taxation will instead fund local authorities giving them an annual financial increase of about £12 million.
Central Government will continue to set the rates of motor tax and there will be no increase in 1997. However, for 1998, local authorities will have discretion to vary the rate by a maximum of 3 per cent. From 1999, they will be able to vary the rate by not more than 6 per cent.
When asked what would happen to those who had not paid their water charges, Mr Howlin indicated that these would still have to be paid as outstanding debts.
Refuse charges, which raise £8 million annually, are to remain because, the Minister said, "a great number" of local authorities have already privatised this service and it would be "invidious to drop the tax.
Defining his programme for the reform and renewal of local government as a fundamental change in the decision-making process, it would, he said, seek to re-establish local government "as the legitimate voice of local communities and to modernise all aspects of its operations".
Fianna Fail's spokesman on the environment, Mr Noel Dempsey, said his party supported a reform of the managerial system allowing the effective exercise of responsibility by councillors. However, he feared that the announcement on water and sewerage charges was a sign of "pre-election panic".
He also warned that Mr Howlin's promise to allow "a discretional local contribution for a defined period" was the imposition of local charges by another name.
Welcoming the end of the RPT, the finance spokesman for the Progressive Democrats, Mr Michael McDowell, said two previous coalition governments involving Fine Gael and Labour had "tried to reverse their political misfortunes by deathbed conversions in the area of taxes. Those efforts were unsuccessful."