Michael Kitt (Galway East, Fianna Fail)

I welcome the motion and congratulate Deputy Niall Collins on bringing it forward.

Rates bills are contributing to the closure of businesses throughout the country, leading to job losses. I have met various lobby groups recently who have given their perspective on these issues. The Licensed Vintners Association asked when a new Valuation Bill would come before the Dáil and would it include a measure to allow for an immediate appeal of rateable valuation based on a change of economic circumstances. At present, a premises can be re-rated only if there is a physical change in the premises. They gave the example of a public house, 80% of whose business is food, being by-passed by a new road and losing 80% of its business. This is not a material change in circumstances under current valuation law and the premises' rates will stay unchanged even though the business has been decimated.

The Restaurants Association of Ireland feel the present rating system is unfair and is contributing to job losses and business closures. Restaurateurs want permission to lodge an appeal on the basis of changed economic circumstances and inability to pay. They also want a comprehensive review of the present rates system with the aim of funding local government on a more equitable and sustainable basis. This is likely to involve the setting up of a representative review group to examine the rates system in detail, consult with all interested parties and recommend the best alternative. They mentioned the local government efficiency review group, which has identified savings of €511 million to be achieved. This is mentioned in our motion. If even half of the €511 million suggested by the group were passed back to business the total commercial rates bill could fall by almost 19%.

These lobby groups made clear and serious points. Commercial rates provide almost 30% of local government finance. This is being realised from a small and hard-pressed base. That base will be further reduced if we continue with this system. In County Galway, for example, €2.7 million of rates was written off in 2009 and in Galway city €2.4 million was written off in the same year. These figures have, no doubt, increased since then and will continue to do so.

What is true for publicans and restaurateurs is true for all businesses, particularly small and medium size enterprises. Members of the Irish Small and Medium Enterprises Association, ISME, with which the Minister of State was associated, say that 40% of small and medium size enterprises are under threat from the burden of commercial rates and ISME members are making a major contribution to the national finances. Chambers Ireland and RGDATA have consistently criticised local authority charges which hit businesses that are already struggling in the wake of the international downturn. The Irish Hotels Federation has been lobbying on the negative impact of rates on its industry. The federation called for the scrapping of the 2001 Valuation Act and made the point that rates fund 90% of local authority finances.

Those issues, plus the slow rate of revaluation by the Valuation Office, are major issues for the people. The fact that an overall review of rates in all local authorities might take ten years is very worrying. We cannot have Irish businesses struggling for survival in these very difficult economic circumstances with the rates regime on top of them. As many business owners have said, rents are falling but rates are increasing. At a briefing session today, the Drinks Industry Group of Ireland said turnover had dropped 28% in four years while rates are still increasing.

I ask the Minister to look at the situation in the United Kingdom, for example, where economic conditions and ability to pay are taken into account when rateable valuations are assessed. Councils there have the power to give exemptions from paying rates and money collected is put into a central pot and distributed to councils on the basis of need. I ask the Minister of State to support the motion and to take this opportunity to take real action to help small businesses which are in very serious difficulties.

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