Robert Troy (Longford-Westmeath, Fianna Fail)

I welcome this opportunity to speak on this very important motion. I compliment my colleague on bringing it before the House. It is an extremely important and relevant topic as all local authorities throughout the country are setting their annual commercial rates. It is one of the biggest issues facing many businesses. The Government needs to sit up and do something about it very quickly.

Just a few months ago the Government hailed the VAT reduction as part of a stimulus to the economy. However, this week it is stating a 2% increase will not affect our domestic economy. We are also speaking about small businesses having to cover the sick pay of employees for up to four weeks. This is on top of the huge burden of commercial rates. Commercial rates account for almost 28% of all local government finance. ISME estimates that two out of every five small businesses are in danger of closing due to the burden of commercial rates. The businesses represented by ISME make up 95% of all businesses in Ireland and employ from one to ten people. This group estimates that 172,000 jobs could potentially be at risk mainly through commercial rates.

In recent months, I have met with numerous small businesses in my constituency of Longford-Westmeath which are seriously struggling to pay their rates. They have told me that this excessive burden would be the principal reason they may have to downsize or close in the near future. If it remains unchanged, our present draconian system means that more people will end up on the live register, more families will be struggling and more towns will be decimated.

In the current climate we are all agreed that job creation is a priority, but our present system of rates works directly against this goal. Under the current system, if a business ceases to trade it does not have to pay any of its rates bill. This has the effect of reducing the number of ratepayers, thus crippling a smaller group of remaining ratepayers.

There is also an anomaly in that if somebody wanted to set up a business they would have to clear the unpaid rates on the property in addition to then paying their own rate bills. Surely the Minister can see that this acts as a direct barrier to new businesses moving into a vacant premises. I will cite an example where Longford County Council initiated a positive initiative recently whereby it is giving grant assistance to new businesses opening in certain locations in order to incentivise businesses into particular areas of the town where there are many vacant properties.

The present system makes no allowances for an inability to pay or a change in economic circumstances. Given our current economic situation, this seems completely ridiculous. How long must struggling businesses wait for the Valuations Office to complete its review on the valuation of properties? Numerous groups representing businesses have requested that a simple "economic conditions" clause should be inserted into the Valuation Act 2001. This can easily be done and would afford the Government an opportunity to view alternatives. It would receive support from across the House. I raised this issue in an Adjournment debate in July. At the time, the Minister of State, Deputy McGinley, said the commission for valuations was actively reviewing options which would facilitate the delivery of the revaluation programme within a shorter timeframe. The timeframe we are talking about is ten years.

Notwithstanding the snail's pace of the review, it is necessary to point out that it is still based on the 2005 rental value of the property. We all know that rental values have altered drastically since then and even after the review a business struggling to pay its rates bill could still be forced to close. Last year, the Government's efficiency review identified potential savings of €511 million, which could be used to alleviate pressure on ratepayers. If even half these measures were implemented the commercial rate bill could fall by 19%.

I compliment the many local authorities who are acting on these reviews. The county manager and his team on my local authority are pursuing an efficiency agenda that is lowering the cost of running that council.

I am asking the Minister of State, Deputy Perry, to do something quickly, which would have the support of the House, that is, to install the "economic circumstances" appeal clause in the Valuations Act 2001. That would give an opportunity for us to examine alternatives. Perhaps we can also examine a self-assessment system and a percentage of turnover. Under the UK model, a council has powers to exempt struggling businesses and can offer a 50% mandatory exemption for rural businesses.

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