Charlie McConalogue (Donegal North East, Fianna Fail) | Oireachtas source

I support the Bill brought forward by Deputy McGuinness and commend him on putting in the effort to draft it and bring it before the House. I commend him also on the work he has done throughout his career here in Leinster House in terms of being a strong voice for enterprise and encouraging Government policy which supports business, and medium to small businesses in particular. His business background is a great asset to him, which he brings to the Dáil and to national policy by introducing this Bill.

The Bill does four things in particular, which Deputy McGuinness outlined in his opening contribution, in introducing a single mechanism for the making of an annual rate on valuation. It also introduces a fair and equitable refund scheme in cases in which properties are vacant, and deals with the question of landlords' liability for rates that have not been discharged by tenants. Also, the Bill provides for a coherent mechanism for reviewing all aspects of the rating process and the collection of rates. Overall, the Bill is very important legislation and brings to the debate a response to some of the very real problems we have with our rating system.

I accept that the system of rates goes back many years. Much of the legislation can be traced back to the late 1800s. Many Governments have continued with the system in place, but that is no excuse for the fact that the system is no longer fit for purpose. It is long past the time when it needs to be changed and a total review done of how we charge businesses. We must ensure we do so in a way that does not stifle them, and try not to create a situation in which many businesses that could otherwise have got up off the ground, so to speak, might look twice when an opportunity was presented.

The lack of progress on implementing real change in the rating system is in stark contrast to the way water charges were eventually changed, albeit only after massive public protest on the streets. We do not see the same urgency from the Government in looking at the rating system that is in place and bringing about real change in how rates are levied on businesses. That is an unfortunate reflection of the fact that the Government will tax or charge one if it thinks one will pay. We have seen that in the way the Government has raised revenue from the public through regressive measures, including flat charges in a number of areas. We also see it in the flat charges that continue to exist in a rates system that the Government has not addressed.

There is a need for real reform. The hunger for reform exists across the public and in various sectors of society. The Government promised to act on it, but has sat on the issue of rates, and we have not seen the type of reform that businesses need. That means a hedge fund in an office next door to a sweet shop is levied with the same rates as its neighbour. There is no consideration given to the ability of a company to pay.

Like every other Member, I have received representations from businesses across my constituency that have found the rating system is making life impossible for them. I will give the Minister of State some examples. A small hairdressing business in a new building constructed in the mid-2000s with a premises of no more than 300 sq. ft. is levied with a rate of €6,000 per annum. That is over €100 per week levied on a small business. It is a very significant charge considering one can rent properties of that size in many locations around the country for approximately €100 per week. Another example involves a restaurant business seeking to purchase a property in which to continue its business. The rates valuation of the property was €8,000 per year, whereas the property could be purchased for a little over €80,000. If one was going to obtain a rent of €8,000 on a property with a purchase price of €80,000, any financial advisor would tell one that was an exceptional yield and a sound financial investment. It is the exact opposite with the sums being put before businesses looking to set up. They have to pay up to 10% of the value of a property per annum in rates to the local authority. Another example is that of a petrol station starting up which is facing rates of €30,000 while trying to get off the ground. That is only a small selection of examples. The common thread is that the local authority does not have the discretion to come to arrangements under the scheme. There should be an up-front scheme for new businesses that are trying to get established, with charges levied that reflect the ability of companies to pay. I have no doubt this issue is a significant contributor to the fact that many of our town and village centres have been dying on their feet for the last number of years. Businesses are closing and shop fronts are shuttered. If one has travelled through any reasonably sized town over the last number of years, the only enterprises one will have seen increasing in number are charity shops. The average small town now has four or five charity shops, which is a reflection not only of the economic environment, but also of the fact that charities are among the few businesses that are exempt from rates. Therefore, it is possible for them to keep their overheads low, make a profit and return an income for the relevant charity. Businesses cannot do that. If a business wants to set up, it is faced immediately with significant charges. One of the first questions business owners ask when they assess a property is "What is the rate on this premises?". Not only will they have to pay rent, they will also have to pay a rate charge which is more than the rent. It is an entirely illogical position and one we should in no way continue to stand over. It is anti-business. As long as we stand over it, we will continue to see businesses which might otherwise have got off the ground look twice and ask why they should put themselves under that pressure. It is too much of a punt and a risk. They will see that they will be paying out all the time, with no light or income at the end of the tunnel.

We need to address the structure and system that are in place. I urge the Minister to do so in a serious way which examines the way in which rates are levied and introduces a mechanism to take into account the ability of companies to pay. Income should have a direct correlation with the amount being sought. I commend Deputy John McGuinness's Bill to the House and urge the Minister to address the matter. It is long past time for a radical overhaul of the rates system in this country. I ask the Government to address the situation promptly.

See this speech in context