Shane Cassells (Meath West, Fianna Fail) | Oireachtas source

I thank the Minister of State, Deputy Phelan, for outlining the provisions of the Bill. As he said, this is the first step in many years towards modernisation of the commercial rates system. Those of us who were councillors and have dealt with council budgets - I dealt with 17 during my time as a councillor - will know that the old chestnut was the pressure from managers on councillors at budget time to increase commercial rates in the county or town. Expenditure for the year ahead was totted up and then income was totted up, with the gap determining the relevant increase in rates. The Minister of State is correct that regardless of who was in government, a letter always issued from the relevant Minister in the Custom House urging restraint and caution at budget time, with little else accompanying that letter by way of help to ease pressure on councils and so the axe fell on businesspeople. In the case of Fianna Fáil, we did exercise that restraint, especially over the last decade. There has been a freeze on rates in my own county of Meath that has not been replicated nationwide. There have been rates increases in some counties and they are now on the rise again in particular counties.

Commercial rates are an essential part of the day-to-day funding of local government. The key services that communities rely on would not be possible without the contribution of our local businesses, which I always acknowledged during my time as a councillor and I do so again in this Chamber. As stated by the Minister of State, over €1.5 billion, or one third, of local government funding is spent on day-to-day services provision and capital investment. Commercial rates revenue is the lifeblood of local government yet this critical pillar of revenue is under increased strain, with over €300 million per annum in rates unpaid. There are serious issues with the efficiency of the collection system, as the Minister of State has acknowledged. With the shift to e-commerce, the foundation of the system is being whittled away. The burden of holding up local government is falling on the shoulders of bricks and mortar outlets at a time when retail in this country is changing. Prior to Christmas there was an article in the Irish Independenton the death of our towns, which I do not subscribe to in regard to every town. Some towns are fighting back and are using their chambers of commerce. Councils do that also such that I do not think that that was a fair analysis of every town in this country. Every town in Ireland is showing the signs of pressure that businesses are under in terms of vacancy rates, the proliferation of fast food outlets in certain areas, bookies and charity shops, all of which are testament to a fundamental shift in how people shop and how retail is changing.

After years of delay, the Government has brought forward this Bill. The timing in terms of the local elections is telling in itself. However, it is a beginning. What is required to strengthen this Bill is a more ambitious vision for the future of commercial rates. It needs to recognise the limitations of the current system and the pressing need to revitalise towns across Ireland. Fianna Fáil will be bringing forward amendments to the Bill to ensure it is fit for purpose in 21st century commerce and that it recognises the broader social policy goals of keeping rural towns alive. The introduction of equalisation and the abolition of town councils has increased pressure on the rates system. Payment changes following evaluation should be staggered over a specified timeframe to alleviate the impact on a business of dramatic increases. A formal inability to pay clause should be provided for in the Bill to enable a struggling business to agree a path for payment into the future while keeping the business alive. I acknowledge that some councils and directors of services do engage in this manner.

Fianna Fáil will also propose the establishment of a rate release scheme on a statutory footing to allow local authorities to reduce or eliminate rates for a new business in town centres and rural areas for up to two years. Businesses that convert upper floors into accommodation should also be eligible for rate relief. The conversion of above shop units into residential accommodation would help to breathe new life into our town centres and promote town living, and the rates system should encourage it. The efficiency of the collection system should be comprehensively reviewed, which the Minister of State mentioned earlier. Similar to the property tax, the Revenue Commissioners may be better equipped to administer this system. When the household charge was managed by county councils efficiency was not good. Following the introduction of the local property tax and its administration by the Revenue Commissioners, efficiency increased to over 90%. This proposal should be examined.

Ultimately, a new commission on business taxation should be established. This should confront the dramatic shift to online purchasing that is transforming the retail landscape. Interestingly, prior to Christmas, at the House of Commons select committee dealing with this aspect, Mr. Mike Ashley, one of the biggest proponents of online shopping, called for the imposition of taxes in that area, which it was good of him to suggest after he has made his billions. He also spoke about the death of towns in England being irreversible in some circumstances. As I said, it was good of him to call for the imposition of such taxes after he has made his millions. The commission's recommendations should form the basis for a new approach to taxation that is fit for purpose.

This Bill forms part of a more complex picture. I have consistently said in this House that our local government system needs a reliable, sustainable revenue source to fund critical local services. It cannot be allowed to fall solely upon the shoulders of struggling businesses to provide this funding. This point is also consistently made by IBEC. I have made this point to the Secretary General of the Department of Housing, Community and Local Government at the Committee of Public Accounts in the context of the Comptroller and Auditor General's examination of this area. The format in which these finances are levied must be improved and enhanced. We need a more efficient and fairer system which keep businesses alive and gives them a fighting chance to adjust. These short to medium term measures should be adopted in this legislation. We need to deliver for businesses across Ireland. There are thousands of jobs at stake, which will affect the very fabric of our towns and villages. To accomplish the type of towns we want to have in the decades to come we need bold, innovative and long-term action. We will fight for these measures. I look forward to discussing those measures with the Minister of State on Committee Stage.

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