Dara Calleary (Mayo, Fianna Fail)

I thank my colleague Deputy Niall Collins for giving us the opportunity to address this unequal system of taxation. Everybody in the House agrees the current rates model is exactly that. The business community, in particular the small and medium enterprise sector, is paying the burden of local government while many of those who benefit from its services are not currently making any contribution. As the local government fund is cut year after year, that burden is getting bigger. As the service demand on local government increases, it is a burden that will continue to increase unless we act collectively to reform it.

I had great hopes when the Minister of State, Deputy Perry, was appointed with responsibility for small business. He has an interest and a commitment to giving small businesses a break. However, the headlines and progress to date make a bit of a joke of the Government amendment, which praises its record in promoting and protecting small businesses. We have a 2% increase in VAT coming up, while we are making business pay for social welfare reform by cutting redundancy rebates from 60% to 30%. In addition, we are making them responsible for sick pay. The pension levy has forced many businesses to pay extra contributions for their employees. It seems the commitment given by Fine Gael and Labour in opposition about upward-only rent reviews has gone the same way as so many other promises, i.e. south. We need this Government to take small business seriously and not to continue to attack and undermine it, making it pay for the bills of other parts of government. Every speaker, including the Minister of State, knows the small and medium enterprise sector, particularly the retail sector, is haemorrhaging. The next four to five weeks will make or break thousands of jobs in this country for hundreds of retailers. What they do over the coming weeks will decide if they will continue to open their doors, pay taxes and employ people in the second or third week in January.

We will see on Tuesday week that the sector is suffering attack after attack on the bottom line, and it is not in a position to pass this to the consumer. We need reform of the rates system in order to encourage employment and we need new businesses to get a break for the first year. New ventures should not have to pay the rates until they get up and running and if they maintain or grow employment in the second year, there should still be a reduction on what would normally be paid. If businesses employ people, those employees will pay taxes and pay their way in society. Some of those taxes will fund services.

We need an "inability to pay" mechanism. If footfall and retail expenditure is down and banks do not give businesses working capital, they cannot pay a rates bill. We must define what the rates are for, as many businesses pay rates and money towards waste collection, water charges and other taxes. What are they getting in return for the rates? Most local authorities will not even provide a list of the services being paid for but what other bill does a business pay when it gets nothing - not even information - in return?

In this House we have struggled for years with the issue. When we were in Government we kept giving the excuse we now keep getting that the revaluation process is under way. It has been indicated that it will take many years for this to be finished but small businesses do not have many years. They have weeks to get the cash to allow them trade into next year. It is time we gave them a break and took them seriously. Even if the Minister of State provided reforms in this sector he would have performed a great service for his colleagues in the small and medium enterprise community.

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