Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

The Minister of State is giving him discretion. The Valuation Office has often been in court about revaluations in cases in which the legislation has provided that it shall do something, but that does not mean it ends up doing so. It may win or lose a court case. That should be a direction; it should not come down to whether the commissioner feels like doing it. That might never happen. He might choose not to exercise that discretion because, to refer to other documentation from the Estimates meeting yesterday and notes we got, his priority is the national revaluation programme. The key priority of the Valuation Office is to deal with this ongoing programme, which is being rolled out to a few more counties this year. The commissioner - I do not know whether the officer will be male or female - will not want to divert resources away from that programme into revisions, but of course revisions must happen because every time a new planning permission is granted it is sent from the local authority to the Valuation Office advising that this is a new building and a new business and requesting that it be revalued in order that rates can be applied to it. That is the way the system works. The Valuation Office will be very busy getting new businesses into the system and accounting for any changes to structures as a result of planning permissions, dealing with the national revaluation programme and the setting up the new organisation. The Minister of State thinks the commissioner will have time for discretion in the few hardship cases that arise, and I would like to agree with him, but there is no basis for saying that. It it is wishful thinking. I would like it to happen, but there is no basis upon which one can have any confidence that it will happen.

This is probably the only tax that I can think of for which the bill is determined without reference to the business or the people running it. The Valuation Office has a valuation from years ago. The Minister of State indicated that the five-to-ten-year revaluation period was optimistic. It was a polite way of saying it did not happen. The Valuation Office sets the valuation and then it goes to the local authority. We all understand that system and we think everybody else understands it. When it comes to the annual Estimates process, local authorities can see what they will get from the Local Government Fund and from the Department of Transport, Tourism and Sport for roads, as well as funding from its own resources, and notes its level of expenditure.

They have to hit a bottom line to balance their books. That figure is calculated by taking what is required to balance the books by the total county valuation of all the properties in the county for commercial purposes, multiplied by an arbitrary mathematical figure to balance the books. In recent years, thankfully, there have been very few increases in the local multiplier by most local authorities.

There are two public bodies setting the bill, but there is no recognition of the current business taking place in a business premises. The Valuation Office and local authorities set the rate at the annual estimates meeting. It is the only tax I can think of where a taxpayer is presented with a bill, and is told what to pay whether one likes it, it is appropriate, one can afford it or one is profitable. It is unfair and that system has to be realigned. There may be a simpler way of doing things. I am not offering a solution, but rather a point for discussion.

The Valuation Office will tell one that the 146,000 premises around the country which are occupied are, by and large, paying rent. In truth, there is a correlation between the market value of the rent, the rates charge which comes from the Valuation Office and the local government estimates process. Those percentages are fairly well established across the country and are probably fairly uniform within a couple of per cent.

A simpler way of doing this would be to take the rent bill of a property into account. If, for example, it is €10,000 a year one would send a cheque of X% of the rates to the county council. That is the true valuation of the property for the business in that year. The figures for the rent bill could be self-assessed or otherwise verified, and a percentage sent to the local authority. I have not suggested starving local authorities of money in anything I have said. If such a system was in place it would beg the question of why one would need a valuation office at all. It may have other responsibilities in respect of national utilities.

One can ask whether there is a simpler way of setting rates for ratepayers in a county. That can be done without damaging the overall rates taken in a county. Self-assessment is one possible option. People will tell the Minister of State that would be very complex and not to go there. He is too bright to fall for that. I ask him to consider the proposal in a wider context. I have not said what the percentage should be, but there is an option. We have a proven value for every business in the country.

I wish to show the Minister how constricted the Bill is. Under the current valuation system and what is proposed, local authorities which want to help to rejuvenate some of the main streets in their towns cannot do so through the rates system because they are obliged to charge the rates that have been determined. They do not have the option to do otherwise. Some businesses which go bust might end up having rates written off if they are not collectable, but local authorities cannot decide to take half of the legal rate and declare a business as up-to-date, as the current legislation and the Bill do not allow for that.

One local authority has had to use great resources and imagination to get around the nonsense we have created in valuation legislation. Laois County Council is a model for other counties, but they should not have to follow it. The legislation should be changed so that this can happen without Laois County Council having to introduce an extraordinary scheme to get around the rigidity that is the commercial rates system. It is a business incentive scheme and is currently available for Portlaoise and Abbeyleix. The Minister of State can learn from this as it is very innovative.

It is intended to extend it to Rathdowney, Mountmellick, Portarlington and Mountrath in the near future. It is on the council's website. The aim of the scheme is to encourage the use of vacant commercial premises within a designated area of Portlaoise over a three-year period. The incentive scheme will assist new commercial businesses in setting up in the Main Street area of Portlaoise, which is the traditional retailing, commercial and social heart of the town.

With limited resources from the county council's fund, it is implementing the initiative to encourage new businesses to establish in these areas. However, having considered the commercial reality of businesses in Portlaoise, Laois County Council has announced the use of vacant commercial premises in the Main Street area of Portlaoise. The following statement demonstrates how it intends to get around the nonsense of the rates system: "The intent of the scheme is to provide a grant incentive for new businesses to locate in premises that have been vacant for a period exceeding six months and to encourage diversity of retail opportunities within a designated area." The grant is not a rates reduction because the law does not allow that. The council has had to invent a new and unique grants system. The grant can provide the financial assistance that makes it attractive for new business to consider setting up in an area where there are a number of vacant shop units. These premises are at present not yielding any rates for the council, therefore this is of benefit to it.

The objectives of the scheme are to promote the development and enhancement of retail floor space in the town centre, enhance the viability of the town centre, support the continued role of the town centre, encourage new businesses to occupy commercial premises or shops that have been vacant over a period of time, encourage diversity of business opportunities within the town, provide limited financial assistance to those businesses through the grant scheme and provide an income for the council and jobs for the town. To be eligible for the scheme a shop must be rated. Premises vacant for more than six months would be eligible for a grant of 75% of the rates bill in year one, 50% in year two and 25% in year three. The maximum number of years allowed would be three. One can see how the scheme would work.

People have to pay the rent, but can fill in an application form from the council and receive a payment from the local authority which is called a grant. It cannot be given legally as a rate reduction, rebate or discount because of the cumbersome legislation. It has had to, therefore, invent a grant scheme. That demonstrates what local authorities have had to do to get around the current legislation.

The areas covered by the scheme in Laois are Main Street, Market Square to the roundabout on Bridge Street, Church Avenue, Church Street and Railway Street to the roundabout and Well Road to the junction with James Fintan Lalor Avenue. A map of the area has been published. In terms of the proposed use, the following rules apply: use as a shop as defined under class 1 of the planning and development regulations 2001; office use as per class 2 and 3 of the aforementioned regulations; use for medical or health professional clinics; or use as a crèche, day nursery or day centre.

There are exclusions, for good reason. Use is not permitted for the following businesses: takeaways, amusement arcades, head shops, betting offices, nightclubs or public houses, and unwanted jewellery and cash for gold shops. Other businesses are also excluded because too many of them are popping up in the town. The council was very clear about the type of good development it wanted in the town, and it is to be encouraged in that. The new scheme is up and running.

In case the Minister of State has any queries or is told it is a complex scheme, I can assure him that a tax clearance certificate will be required as part of the application for the grant, approved applicants must sign up to the payment of rates by standing order and accounts must be paid in full each year. One can see that while the council will collect rates, it is prepared to give something back. It is a pity it could not be done through the rates system. The council is to be commended, but there should have been an easier way to address the issue. The current legislation is forcing councils to do such things.

My colleague, Deputy McGuinness, introduced the Local Government (Rates and Miscellaneous Provisions) Bill on Friday, 21 November 2014. The Government shot it down and said there were issues with it, but its substance was good. We need to look beyond the nitty-gritty of the problem.

The difficulty I have is that much of the discussion on the valuation system is about the tribunal and appeals system. A system will be set up and one will be able to appeal internally. The new appeals system will involve a tribunal. I want to know before we start why we are setting up such a complex appeals system. It makes me wonder why I am in this space. An appeals system should be very simple.

If somebody has a problem with tax, that person could go to an appeals commissioner but that office is hardly heard of because the system works. That the appeals system and valuation tribunal is so fundamental proves that the basic system has an issue. The Minister of State can see where I am coming from.

I will highlight one or two points in the briefing document we received yesterday in the Estimates meeting. I can point out two elements of which the Minister is not aware. The provision for the Valuation Office was €8.904 million, with the actual at €6.67 million; it did not even do the job the Oireachtas gave it the money to do. It is not even operating in first gear.

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