Two-thirds of funding being given to Irish Water this year by the Government came from motor tax payments, the Dáil spending watchdog heard earlier this week.
A subvention payment of €439m made to the semi-State utility company last year was being drawn from what is known as the Local Government Fund. This is a fund where revenues from motor tax and local property tax payments are deposited by the State.
Traditionally, the money in this fund was given to local authorities to maintain services and regional roads.
However, this changed last year and a further payment from the same fund, expected to be €399m, will be made this year.
Department of Environment secretary general John McCarthy told the Dáil Public Accounts Committee (PAC) there was nothing unusual about the source of the funds.
He said motor tax proceeds were used to fund a range of things, including the subvention to Irish Water.
The committee was told that two-thirds of the subvention originated from motor tax payments.
PAC chairman John McGuinness said it was difficult to justify this when councils were being “starved of money to fix the potholes”.
Mr McGuinness said TDs often heard criticism in their constituency clinics about the cost of motor tax.
“Now we are hearing that a lot of that tax was going to Irish Water,” he said.
The PAC chairman observed that the tens of thousands of people who protested against water charges would not be impressed with where the funding had come from.
He added that the committee had been taken on “a financial mystery tour” regarding the funding of Irish Water.
Another committee member, Fianna Fáil TD Sean Fleming, expressed surprise that motor tax money was funding the utility.
“It is just getting more bizarre as time goes on. That is all I can say,” said Mr Fleming.
“People are paying on the treble here for Irish Water,” he added.
“The public have paid for the water infrastructure through general taxation, they will be receiving bills from Irish Water shortly and now they are finding out they’re propping up Irish Water with their motor tax as well. People will be utterly shocked to hear this news.
“Irish Water is a financial fiasco and the sooner the Government accepts this, the better.”