Bernard Durkan (Kildare North, Fine Gael) | Oireachtas source

I am glad to have an opportunity to say a few words on this legislation, having spent a fair amount of time in my salad days on a local authority. I was interested to hear what Deputy Ó Cuív had to say. We should bear it in mind and it needs to be dealt with in this Bill at some stage. Where a commercial ratepayer falls behind and goes into arrears, normally the resolution, as he correctly said, is that they have to pay their arrears as well as their rates or a lump sum. This raises an immediate question. If they were not able to meet their liability in the first instance, how are they supposed to be magically able to do it in the second situation? We need to think seriously about that.

Over the years I have found that certain businesses, depending on the location, do not follow the norm in terms of profit. Particularly in recent years guest houses, hotels and even pubs have found that the tax allowance was of no benefit to them because they did not have a taxable income or a sufficiently high taxable income to be able to use it in any way against their rates. The waiver system that has been discussed is an essential element. It needs to be dealt with and refined to ensure that people do not use it or abuse it in a way that militates against other people with whom they are commercially in competition because that always brings unfairness into the scene.

In recent years some of our constituencies had a rating revaluation. It certainly did not reduce the burden in most cases. The political reality is that in such cases, particularly in straitened times, there is always understandably a bad reaction from the ratepayers simply because they see another burden coming down the track towards them at a time when they feel vulnerable. I ask the Minister of State to bear in mind how this system works and in some way try to alleviate it. There would be no loss to anybody; it is just a matter of trying to be fair to the people paying rates and who, depending on the time of year the valuation takes place, may find themselves in a difficult situation.

I always felt that if a person fell into arrears and there was a receptive ear from the local authority, it was possible to trade their way out of the difficulty in which they found themselves, provided the burden of payment now required was not so great as to make it impossible for them to exist. One of the techniques that used to be applied and is still being applied by lending institutions in respect of people who get into arrears is that the level of payment demanded is such as to put the individual completely out of business or cause them to fail in their contract to meet the payments. That is of no benefit. As soon as they fail to meet their payments they are in breach of whatever agreement into which they entered and are no longer regarded as a viable enterprise. If the person - either a borrower or a commercial ratepayer - has got into difficulty, it should be possible for the local authority to sit down with them, examine the degree to which they have got into difficulty over a specific period and work out how to pay the rates for the current year and some of the arrears, provided that no interest penalty or other penalty is applied. If that happens, there is no benefit and the situation cannot be resolved.

I do not agree with this harsh attitude that is developing nowadays over people who find themselves in arrears in general. They are regarded as no longer being economically viable and because they are not they must, we must assume, surrender their property, surrender their house, forgo the business or whatever the case may be. That is far too harsh and it is not fair to people who have been working hard and trying to meet their commitments in every way possible. I say that in reference to the proposal to modernise the legislation governing commercial rates and improve the rate-collection powers of local authorities. I thought they had enough powers already. In using those powers, it should not be seen as an opportunity to delay indefinitely the collection of rates because that also undermines the entire system. However, there is no reason the existing powers if properly operated are not sufficient to facilitate a continued and smooth collection system provided that everybody comes on board with the plan.

Businesses face different situations at different times of the year. Sometimes something unexpected happens and it can deal a very serious blow to the viability of the business and as a consequence the ability of the ratepayer to meet their payments. Particularly in the present climate, the first item should be to examine the extent to which the business has operated over the rateable period in order to ascertain whether the business was deliberately winding down or deliberately falling short of targets to avoid having to meet payments, or whether it just happened by virtue of circumstances outside its control, it found itself unable to meet its liabilities. In that case a business should be treated with a certain amount of sympathy and latitude in order that with a certain amount of encouragement, hopefully it can recover.

It is not always the ratepayers themselves that suffer. It can be staff - possibly a considerable number of staff depending on the size of the operation. It can be as a result of a family bereavement or other reasons that need to be taken into account. Some people will claim that we are concerned about commercial activity and that this should not come into the calculation at all. However, humanity is humanity and things will happen from time to time that will create problems for individual businesses.

Local authority members have been more reasonable than they were. Once upon a time it was a great idea to pile on the commercial rates to such an extent that a significant imbalance arose.

Of course, that was in order to fund things that the council itself was attempting to fund. There developed an antipathy towards local authorities among the business sector which was unnecessary. Today, at least, it appears that most local authorities and their members take a more realistic and sympathetic attitude towards the commercial sector because they do not want businesses going to the wall in their constituencies, which is good to see.

Any increase in the rate per euro should be done on the basis of the advice available to the chief executive or county manager and only on that basis. It should also have due regard for the need for businesses of varying natures to survive and must also recognise that there can be vast differences in footfall in different areas. Deputy Alan Farrell and others made reference to arrears of rates when a business collapses and the issue of incoming ratepayers being expected to pay the outstanding bill. There is an arrears system in place which most local authorities can and do apply. Indeed, there is no excuse for not applying it. Under that system, the period for which the premises has been idle should be deducted or discounted. The previous occupant should be pursued for any outstanding arrears, although how one gets the money from him or her is another question. That said, if the business went through the normal liquidation process, the rates bill should be recoverable in any event.

The local authority in my area does not require the incoming occupant of a premises to pay any outstanding rates. That used to be the system but it was changed, and rightly so. A trading business in any location in town or country is far better than the shutters. This can affect small rural areas as well as bigger urban areas. The closure of businesses and the resultant reduction in footfall and income can affect everybody. When bigger businesses close it can have a major impact on an area, whether it is urban or rural. I ask that these issues be borne in mind in the context of regulations or amendments to this Bill on Committee Stage.

The duty to inform the local authority of a change of ownership is important. Obviously it brings the database up to date. It is in the interests of the local authority to have accurate information on who is operating a business in a particular area. We must also consider the businesses that are not as legitimate as they would appear and with whom legitimate businesses find themselves in competition. I refer here to those who, for one reason or another, are not carrying on the business for which the premises is ostensibly occupied. That can do a lot of damage to adjoining businesses and can give an area a bad name. As a result, competitors suffer, particularly if one in their midst is not reliant on a visible source of income for their bread and butter. I would hope that the principals in all such situations are identified as being the ratepayer and that their rates will be determined on the basis of the information that is available and that the information is the best that can be provided.

Temporary abatement is referred to in the Bill. When I refer to temporary abatement, I mean situations where the rates are set aside or waived completely for the period during which the premises has been inactive. It is as simple as that. No income is being generated from the premises and there is no reason to believe that applying a penalty on it is going to make it any more active.

I have already covered the chief executive and the powers of the local authority. The annual rate in the euro should not be determined on the basis of everybody else's property, even in the same town or village because not all premises have the same commercial potential. If one particular premises is doing well commercially, it does not naturally follow that all of the premises in the same area are doing as well. Some of them may not be able to generate the level of rates that are necessary in a particular situation. During the recession in particular, the biggest single issue that was brought to our attention by those in the hospitality sector, including hoteliers, publicans and guest house owners, was the burden of rates. People complained that their rates bill bore no relationship whatsoever the their ability to generate income from their premises. I would ask the Minister of State to bear that in mind and try to ensure that there is sufficient provision in the Bill or in the conditions relating to it so that people who find themselves under pressure and who may have to renegotiate their rates bill are given a reasonable hearing. If we do not give them a reasonable hearing, we are just exacerbating their problem. If their business goes off the rails, punishing them further is not going to be productive. It is far better to work with them and try to encourage them along the road to recovery. Once recovered, they will be able to meet their payments, thus generating income for themselves and for the local authority.

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