Dara Calleary (Mayo, Fianna Fail) | Oireachtas source

I welcome the chance to speak on the Bill. If we are to be honest, it could be renamed "the rearranging of deckchairs on the TitanicBill". As a country, we must face the fact that our current rates system and this tax on businesses is wrong and utterly inefficient. It is a tax on enterprise and job creation for which nothing is repaid. It is a basic funding mechanism for local government, and it is time we faced the fact that we must come up with a new way of doing this. It should be less harsh with a focus on a society with the capacity to create jobs and wealth in the economy. The current system represents a modern form of highway robbery. It is the old way of people paying a bill, with dubious returns.

If a business is in a town or city centre, it would get street lights and cleaning in return, but we would really begin to run out of rope after that in the provision of services. The business must pay for water coming in and going out, as well as electricity and other services. If a business is in a business improvement district, it would pay rates and something extra for the district. These districts have seen some really good work throughout the country, but this is an extra charge on top of rates.

Deputy Eoghan Murphy made a very good point about how we bill for rates. A demand goes out for a bizarre amount, with no breakdown of the total or indication of how the money is allocated. For many local authorities, there is no way of saying where the money is going. It might be going to salaries and wages or services that may not be relevant or of benefit to the business community. It is an authority's only real source of funding, and it comes from the business community. The anti-enterprise focus of the rates system was best summed up to me in Roscommon last October when I met a business owner who had a business premises in Carrick-on-Shannon that was performing very well, employing ten people. He opened a second branch of the same business on the Roscommon side of Athlone. The first letter he got from Roscommon County Council was not a welcome or a "thank you" for creating six jobs and it did not outline what the Roscommon local enterprise office could do for him. It was not a request to meet the business owner. Instead, it was a rates bill for €6,500 and a request to pay within 30 days. It would have been too much for the letter to have "please" at the end and I am sure the recipient could not ask what the money was for. That constrained the entrepreneur's ability to create employment that might have taken somebody from the live register and given a person some sort of start.

As the phrase goes, we are where we are. We have a Bill, and in fairness to the Minister of State, there are some elements that must be welcomed. I welcome the sports club element, for example, which is important, and the element relating to child care centres, as we have discussed over the past two days. We must reconsider the whole revaluation process. It is a good idea in theory but it has struck fear into business communities throughout the country. It was drawn to my attention that in parts of Waterford city that had seen necessary regeneration from private enterprise, the first thing received by businesses was a revaluation, with rates having quadrupled in some cases. This happened because people took the initiative to reinvest in and upgrade premises, trying to make the city centre a better place to go.

There are places in the country that need that kind of initiative and investment, but when one considers the cost, one might be able to cover the upgrade but the additional expense of a rates revaluation - dead money - makes the concept uneven.

As a result, many people are turned off doing it. We must give flexibility to local authorities to enable them to encourage people, through rates incentives, to upgrade their buildings and businesses.

We must confront the fact that rates are a tax that will soon go out of fashion and will be unpayable. As businesses and people increasingly go online to make their purchases, they are often purchasing products from outside the jurisdiction from people who do not have to pay rates or, in many cases, VAT, although that is a separate discussion. They are buying the product at a cheaper price because the cost base of the online retailer is so much less, yet we still enforce this system for retailers who are struggling to keep the show on the road and who will not see what they are getting for it.

Deputy Bannon spoke about the need for town and area renewal. He is absolutely correct. One does not even have to leave this city to see town centres in parts of the suburbs that are dying, having once thrived, because people are going online to shop or going to the big shopping centres. While this Bill goes some way towards rebalancing the discrimination that exists against our traditional centres, it is far short of what is needed. What is required is a complete re-imagining of the way in which we tax business and fund local authorities. Our town centres must survive and thrive. They are essential elements of a modern society in terms of cohesion - a place for people to do business and to mix and gather. At present, in many town centres neither business owners nor local authorities have the resources to make the necessary investment. There must be a system of encouragement, through the rates and the local authorities, to allow investment to happen without the investors' being penalised. When one makes an investment in one's premises, one is immediately penalised because it is upgraded in value, and the local authorities will pursue the person, as they must, with a bigger rates bill. That is not the way it should be done. We should encourage and reward upgrading and investment, rather than automatically penalising it. Perhaps the case should be made that those who leave their buildings in a derelict state, despite all the work under way by councils with derelict site regulations, should be penalised in their rates for the damage they are doing, rather than those who make the effort to upgrade their premises.

The issue of what businesses get for rates has not been clarified. There is never an effort on the part of the Department or local government to tell businesses exactly what they are funding or what work the local authority is doing. My local authority in Mayo, like many other local authorities, has an economic and investment unit. It does superb work. The unit is funded through rates, yet that connection is not made. If rates from a business in a rural area are funding street lighting, the lights might as well be on Mars because there is no public lighting in rural areas. There should be a direct contribution from rates to the upgrading of broadband services. A connection should be made between the rates income and road upgrades. There is no sense in telling business in a rural area that the rates go towards cleaning when the cleaning does not happen. Furthermore, under the new system of local government aprèsthe abolition of town councils, cleaning and road sweeping machines are becoming a much rarer sight in main towns that formerly had town councils. Previously, the council could show the ratepayer that their money was going on cleaning the streets. Now, one would be lucky to see a street cleaning machine twice or three times per quarter, due to the length and breadth of the new municipal areas that must be serviced. That is another service that has been diminished. Councils have funded, and are always good at, various tourism and business growth initiatives. That comes from rates, and that must be explained too.

The notion of sending a demand in the 21st century must be abolished. Councils have to realise that rates are a major source of expenditure for businesses, and businesses should be told what they are getting for every cent. In the amendments to be introduced by the Minister, perhaps a requirement could be applied to councils when they send out the demand - it is not even an invoice, but a demand - to provide a breakdown of where the money goes, what services were provided and how the council can assist the business. One must still almost beg the council to allow payment of the rates to be spread over 12 months. Payment plans vary from council to council and from office to office. Some type of flexibility must be provided for the payment of this major expense, just as one gets flexibility from utility companies in paying other big bills.

The other issue is the existing rate on a building that has been empty but that a new business wishes to occupy. It sums up how weak and out-of-date this legislation is. If one has a business idea, is lucky enough to get the finance together and finds a premises, one is hit immediately with a legacy debt on the building. This happens all over the country and particularly in the hotel sector, where small hotels have hit the wall in the last few years. Approaches might be made to try to get them operating again, but the people are hit by legacy utility and rates bills. In fairness to many of the utility companies, they will deal with the person about the bills, but the rates bill is the one that is dragging many new businesses down.

I realise there are areas of displacement and that there are challenges regarding competition and what other businesses can do, but we must have some type of culture whereby the State encourages somebody to set up a business and promises not to put blockages in the way. The current rates system is the major factor blocking many start-up businesses from getting up and running. The notion that one must pick up the local authority bill of somebody who previously had the building but has left it is wrong, and it is blocking movement on properties around the country.

I do not know how long the Minister will be in office but I expect he will be there for a while. This is a system that must be re-imagined. Somebody needs to lob a grenade into it, blow it up and rebuild it. It is a system that is anti-enterprise and anti-employment. It penalises those we depend on to pay the rates. Their input into how the system works is restricted, as is their input into how we change it, and much of it is never taken on board. If we are have an enterprise-led culture and to be the best country in the world in which to do business by 2016, as the Taoiseach regularly tells us, this system must change. It is the biggest drag on small business in the country at present, and if we are to be the best country in the world in which to do business, we must get rid of the highway robbery that is our current rates system.

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