9 ways to fund Dublin in the future

Analysis: Dublin needs a funding model for the 21st century, here's how it could be achieved with a mix of taxes, charges and financing

By Gerard Turley, University of Galway

The Dublin Citizens' Assembly reported on its deliberations and findings in December 2022. It was tasked with examining and bringing forward proposals for a model of a directly-elected mayor and local government structures best suited for Dublin city and region.

As part of its remit, it was to consider functions that could be transferred from central government to Dublin, and how this should be funded. Reflective of an overall desire by its 80 members for greater local democracy, the Assembly recommended that significant spending powers be devolved to Dublin, including in education, healthcare, transport and childcare. There were fewer details on funding, other than greater devolved powers to introduce or change local taxes, and to raise funds from markets, investment bonds, or loans.

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From RTÉ News, report on the first meeting of the Dublin Citizens' Assembly in 2022

Globally, cities fund operating expenses and the delivery of services using a combination of local taxes, user fees and charges, and transfers/grants from central government. To finance infrastructural investment, the usual sources of capital income are development levies, assets sales, central government transfers, and loans. The mix of income sources varies across cities and metropolitan areas, reflecting local circumstances, levels of economic development, the extent of urbanisation, demographics, and other factors. Practices differ, with no one size fits all.

Based on our knowledge of municipal finance, funding of cities worldwide, and the challenges facing Dublin, here are nine funding sources for Dublin city and region. They are a more diversified mix of (existing and new) taxes, charges, and ways to finance investment.

Commercial rates

Currently, Government buildings are exempt from commercial rates, yet Government buildings benefit from municipal services such as maintenance of local roads and street cleaning. Based on the benefit principle (he who benefits pays), these buildings should be liable for rates, with the income accruing to the city.

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Local Property Tax (LPT)

The residential property tax falls short of its revenue potential. As outlined in legislation, revaluations should take place regularly, every four years to ensure up-to-date valuations and revenue buoyancy for local councils, including the four Dublin local authorities.

Vacant Homes Tax (VHT)

Currently the VHT is a central tax, and is collected by Revenue. We propose that this tax be reassigned to local government (including Dublin). This would allow the four Dublin councils to set the base and rate based on the profile of vacant residential properties in Dublin. More generally, given the extent of vacancy in Dublin and elsewhere, we believe that the definition of a vacant home, namely any residential property in use as a dwelling for less than 30 days, is too generous, and the rate (currently at seven times the basic LPT rate) is too low, for it to affect meaningful change.

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Visitor tax

A visitor or hotel occupancy tax is usually levied to compensate urban governments for the expanded services provided to tourists and visitors. We recommend that Dublin be given the power to levy such a tax, and to consult with national government on its design features in order to reflect local conditions in Dublin.

Motor tax

Given the link between ownership of motor vehicles and the use of local services and infrastructure (e.g. roads), there is a strong case that motor tax be assigned to local authorities. In many countries, motor tax is a local tax, or its revenue is shared between central and local government. Here, the yield should be shared on a pre-determined basis. It could be 25:75, 50:50, 80:20, depending on its design.

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Derelict sites levy

The derelict sites levy was introduced by national government, with the rate currently at 7%. Given the differences in dereliction around the country, we propose that this levy be reassigned to the local authorities. Dublin needs increased powers in relation to this levy, including compulsory purchase, rate-setting, enforcement, and collection powers.

Congestion charge

According to the latest INRIX 2024 Global Traffic Scoreboard, of over 900 cities worldwide, Dublin ranked 15th highest in terms of congestion and traffic delays. Many congested cities, including London, Stockholm, Milan, Singapore, and New York as recently as January 2025, have imposed a congestion charge. The rationale here is not as a revenue-raising measure but to change behaviour and reduce the congestion in the centre of Dublin. We propose a congestion charge assigned, designed, levied, collected, and enforced by Dublin.

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Land value capture tax

As argued by the Housing Commission, the State should secure a proportionate share of the benefit arising from the zoning and servicing of land. One way to do this is by means of a land value capture tax. This involves taxing unearned increments in land values that result from new public infrastructure spending. It is a way for the State to tax some or all of the windfall gain that accrues to landowners benefitting from major infrastructural projects. Work on the lapsed Land (Zoning Value Sharing) Bill 2024 should recommence, with a view to Dublin benefitting from this measure.

Municipal bonds

Borrowing permits local governments to finance infrastructural projects. By spreading the repayments over time, they can match the streams of expected costs and benefits. Municipal bonds are debt instruments whereby the local government promises to pay interest, and repay the principal on maturity. They have been very successful in raising capital for infrastructure investments in US cities. Although less common in Europe, some countries have begun to look again at the case for municipal bonds. This would allow Dublin to mobilise resources by accessing international capital markets, and at rates cheaper than some current financing arrangements.

Together, these funding proposals would go some way to achieve the ambitious goals of the Dublin Citizens’ Assembly. At the launch, its chairman Jim Gavin said "I want Dublin to take its place amongst the great cities of the world – renowned for its quality of life, it sustainable environment, its cultural diversity and economic vibrancy". For this to happen, Dublin needs a funding model for the 21st century. As with the Report of the Dublin Citizens’ Assembly, the proposals outlined here deserve careful consideration by policymakers, both local and national.

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Dr Gerard Turley is a lecturer in the J.E. Cairnes School of Business and Economics at the University of Galway.

The views expressed here are those of the author and do not represent or reflect the views of RTÉ