The Government is expected to reject a number of key recommendations in a major report on local authority funding which advocates the introduction of a property tax on second homes and the limited reintroduction of domestic water charges.
The report, which is the outcome of a two-year Government- led review of funding for county and city councils, warns that the system will need between €1 billion and €2 billion extra a year if current levels of service are to be maintained.
The report finds that there should be a move towards local sources of funding such as taxes and charges, not only to meet the shortfall but also to improve accountability and flexibility in how local authorities operate.
It has also recommended that consumers and businesses should be charged the full economic cost of a series of services provided by councils, and that new charges for local authority services should also be examined.
If implemented, this would see significant increases in the cost of waste collection services in certain parts of the country, such as Dublin, where it has not been privatised.
The report, compiled by Indecon consultants, recommends that more of councils' funding should be obtained from local sources and that the two "key elements" of this should be an increase in local charges and selected targeted local taxation.
It recommends the extension of water charges on "an equitable basis", specifically to holiday homes. It also advises the introduction of stamp duty or rates to non-principal private residences and the expansion of the current commercial rates system.
Minister for the Environment Dick Roche, who is in charge of the review, is believed to be strongly opposed to both measures.
The report has already been discussed by Ministers and is due to be discussed at today's Cabinet meeting.
The recommendations on water charges and rates on non-principal residences are expected to be ruled out by Mr Roche when the report is published in the coming weeks, although other recommendations are expected to be considered by the Government after a consultation period.
Currently rates are applied to most commercial properties, with the exception of those occupied by State bodies. The rates system, which is based on the size of properties, was abolished for domestic properties in 1977.
Water charges for domestic homes were abolished by the Government in January 1997, following a major campaign against their introduction.
The consultants have also made a series of recommendations aimed at improving council efficiencies, including privatising certain services and amalgamating some services between councils.
However, services that have been given to a monopoly provider should be the subject of regulation, to protect consumers and prevent against excessive profits, the report states.
It has also suggested that the Government should examine removing responsibility for water services from councils and transferring them to a regional or national agency.
The report, which has taken two years to complete, was commissioned by a steering group of senior civil and public servants asked by the Government in early 2004 to examine local government funding and to come up with recommendations.
City, town and county councils receive the bulk of their funding, more than €3 billion this year, from central government, in marked contrast to most European countries where local sales, property or council taxes are levied to fund almost all local authority activity.