Peadar Tóibín (Meath West, Sinn Fein)
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Question 2: To ask the Minister for Enterprise; Trade and Innovation the discussions he has had with the Department of Finance or the Department of Environment, Community and Local Government on the issue of commercial rates; if he has carried out an assessment of the way flat commercial rates are affecting businesses; if he will conduct a review of commercial rates and their impact on businesses; if he will examine the prospect of progressive commercial rates for business based on business size and income; and if he will make a statement on the matter. [10090/11]

John Perry (Sligo-North Leitrim, Fine Gael)
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The setting of commercial rates is a matter for local authorities which come under the remit of the Minister for the Environment, Community and Local Government. Local authorities are under a statutory obligation to levy rates on any property used for commercial purposes, in accordance with the details entered into the valuation lists prepared by the independent Commissioner of Valuation. The levying and collection of rates are matters for each individual local authority. The annual rate on valuation, ARV, is applied to the valuation of each property to obtain the amount payable in rates. The ARV is decided by the elected members of each local authority in the annual budget, and its determination is a reserved function of the local authority. The issue of changing the basis on which rates are charged, from a flat rate to a progressive rate, would be a policy matter for the Minister for the Environment, Community and Local Government, in consultation with the local authorities and the Minister for Finance.

While we have not commissioned any reports into commercial rates charges, the Government is aware that the cost of commercial rates is often cited as an area of concern by business interests. Preliminary results from a review carried out by the Department of the Environment, Community and Local Government on commercial rates for 2011 show that 32 of 88 local authorities have decreased their annual rate on valuation this year, while 53 kept the same rate as 2010. This follows a similar pattern to last year, when 31 local authorities reduced their ARV and 55 maintained the same ARV as 2009.

The Minister, Deputy Bruton, has had detailed discussions with the Minister for the Environment, Community and Local Government on how we can work together to maximise opportunity for local business development and to keep all costs which impact on business as low as possible. This work will continue and will include the exploration of options for further reducing local authority charges to business, which the Minister is keen to develop.

Peadar Tóibín (Meath West, Sinn Fein)
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It is important to remind ourselves that main street Ireland is closing down. There has been a shocking trend in recent years of businesses being unable to function. The Small Firms Association reckons that 62,000 businesses are in danger of closure and that 200,000 jobs are in danger of loss. There is an urgency in those numbers that no one can ignore. The major reasons for those closures is a shrinking of the amount of money within the system which I and many Members on this side of the House would say is because of the austerity measures being employed. The deficit has increased from €7 billion to €9 billion this year.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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Will the Deputy ask a question?

Peadar Tóibín (Meath West, Sinn Fein)
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I have a question. Also, there is a movement throughout the State to introduce some level of fairness into the rates system. While local authorities develop the rates, the rates system under which they work is decided by the policy of the Minister's Government. Sinn Féin is a promoter of progressive taxes no matter where they happen. In other words, the more one earns the more one pays. It is ridiculous that businesses-----

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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This is Question Time. Does the Deputy have a question?

Peadar Tóibín (Meath West, Sinn Fein)
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-----that are hardly able to survive are being forced to pay the same rates as businesses that are very profitable. I ask the Government to meet the urgency of this case. Will the Minister develop a rates base that purely takes into consideration the profitability of the business concerned and the value of that business to society, be it an exporting business, a business with substitute imports or a business with a research and development capacity? There is a great deal of opportunity for the Minister's Government to incentivise the way business is structured in this society, and it is not good enough to say it will be reviewed.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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The Deputy will not get a reply because time is almost up.

Peadar Tóibín (Meath West, Sinn Fein)
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Given the urgency of the matter will the Government give strong consideration to the need for these types of progressive rates?

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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The Minister has just over a minute to reply.

John Perry (Sligo-North Leitrim, Fine Gael)
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While no reports have been undertaken to date examining specifically the effects of local authority rates on business, Forfás compiled a report in 2008 on the cost of running retail operations in Ireland. The report found that local authority rates constitute up to 4% of business costs on the retail sector.

I take on board the Deputy's valid point on the costs associated with doing business and the number of vacant commercial properties. We are conscious of that. The Minister, Deputy Hogan, has undertaken a review to study closely the cost of doing business and how best we can reduce the cost of doing business. The implementation of a local government efficiency review is being taken on board now as well in terms of how we can ring-fence the costs of doing business in local authorities. That is very much at the behest of the local authority members. It is our intention to ensure the cost of maintaining a business and the percentage of the cost of retail sales should be reduced.

We are also conscious of the huge amount of excess retail floor area currently closed in main street Ireland. That is due to the boom and the unprecedented development of the tax incentives during the previous Administration which propelled a huge level of development way beyond the requirement. It is all about getting cost competitiveness and reducing the cost. We are focused on the impact of rates on the cost of doing business and it is our intention to move decisively to reduce those costs.

The progressive nature of rates and the model of how rates are charged is a technical area. It is not fully justified as to how that will create a benefit as against reducing the actual cost.

Peadar Tóibín (Meath West, Sinn Fein)
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A Cheann Comhairle-----

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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No, Deputy. The time is up. We are moving on to Question No. 4. I remind Members that there are six minutes for each question - two minutes for the Minister to answer and four minutes for supplementary questions and an answer from the Minister. Everyone is clear on that. The longer Members take in asking a supplementary, the less time is available for a reply.