John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I move amendment No. 1:

In page 5, between lines 14 and 15, to insert the following:

“ “Act of 2015” means the Valuation (Amendment) Act 2015;”.

Amendment No. 1 is a technical amendment and is included to cater for an amendment to section 20. Section 20 is being expanded to include two separate references to the Valuation (Amendment) Act 2015.

I will now turn to amendment No. 15. Currently, rates are levied on properties on the valuation that exists on the date of the making of the local authority budget. This means that the addition of new properties - this refers in part to what I said earlier - or amendments to the valuation list during the year are not effective for rates until the financial year following the making of the budget. Amendment No. 15, as set out in the proposed expanded section 20, subsection (a), provides that additions and amendments to the valuation list become immediately effective for rating purposes.

As for the proposed sections 20(b) and 20(c), currently there are differences in the timeframes allowed to public utilities undertakings and other ratepayers as set out in the Valuation Act. There are no objectively justifiable reasons that different or more generous time periods should be given to public utility companies, as opposed to private citizens or to citizens with businesses. The current provisions in this regard appear to give rise to different treatment for different categories of ratepayers. The proposed amendments to sections 53 and 54 address this and ensure an equitable and more efficient streamlined process for all ratepayers.

The proposed section 20(d) is about rate limitation orders, which was also discussed earlier. It concerns section 56 of the Valuation Act and amends the formula on which rate limitation orders are based. There are two elements to the formula. First, the rate limitation order is introduced for local authorities following a revaluation process to ensure the revaluation is revenue neutral. Revaluation results in a redistribution of commercial rates liability between ratepayers depending on the relative shift in the rental value of the properties in relation to one another. In practice, however, local authorities lose out on income from successful appeals to the Valuation Tribunal, which means the revaluation exercise is not revenue neutral as intended. To mitigate this, it is intended to amend the rate limitation order formula to allow for the inclusion of a factor that takes account of the level of appeals. It is proposed to add this factor in order that the upper limit of rates income in the year following revaluation is raised slightly to take account of leakage on the appeal following revaluation. The factor would be agreed annually by the Minister and by the Commissioner of Valuation.

The second part, which is a further amendment to the formula for calculating rates limitation orders, is also proposed. As it is currently worded, section 56 has the unintended consequence of linking the standard revaluation programme, which is carried out on a cyclical basis, with the valuation cycle for global utility companies. This has a particularly acute impact for any county or local authority undergoing a standard revaluation that coincides with a new valuation of a global utility. It means that the mandatory rate limitation order will limit the rates income from that utility. The global utilities are network based operators with a national presence and include telecommunications operators, ESB, EirGrid and Irish Rail. Irish Water will become a global utility in the coming months and is currently being revalued for this purpose. Authorities being revalued currently stand to lose out from any additional rates income from Irish Water at a potential cost of significant sums. Included in the revaluation process at the moment are Fingal, Tipperary, Meath, Wicklow, Wexford, Louth, Cavan and Monaghan. The addition of the second portion of the formula for the rates limitation order calculation will ensure the buoyancy achieved for new or revised global utility evaluations can be accounted for in the formula, which sets the upper limit for rates income in the following year. In other words, it will accrue to the local authority and they will not have to balance it out with other existing ratepayers, and therefore will potentially see a rate reduction for some of the utility companies. That is an unintended consequence of the current system.