Dáil debates

Wednesday, 30 January 2019

Local Government (Rates) Bill 2018: Second Stage


6:20 pm

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I move: “That the Bill be now read a Second Time”.

How long do I have?

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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Too long. The Minister of State definitely has more time than he needs.

Photo of Pat GallagherPat Gallagher (Donegal, Fianna Fail)
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The Minister of State has 20 minutes. However, he does not have to use all of his time.

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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That should suffice.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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The Minister of State does not have to use all of it. We will not use all of ours if he does not use all of his.

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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The purpose of the Bill is to modernise various enactments governing the powers of local authorities to levy and collect commercial rates. Commercial rates make up approximately one third of local government current income every year and are the single largest income source for local authorities, providing income of almost €1.5 billion per annum. This provides between 16% and 53% of total funding for local services at individual local authority level and makes a vital contribution to the delivery of local services.

Local government is often the main interaction with the State for many people. It is important, therefore, that all aspects of local government operate effectively, including the collection of the funds used to provide the services on which people rely. The Government is implementing the next stage of local government reform, building on the wide-ranging changes introduced in recent years. In order to help support the efficient implementation of local authority functions, the Bill seeks to modernise the collection of rates. The existing legislation that governs the levying and collection of commercial rates is spread across numerous enactments, many of which date from the 19th century. The primary legislation relating to rates is the Poor Relief (Ireland) Act 1838. With the exception of the Local Government (Financial Provisions) Act 1978, which removed domestic dwellings from rates liability, and the Supreme Court decision in 1984, which exempted agricultural land from rates, only minor changes and adjustments have been made since 1838 to the operation of the rating system.

The drafting of the Bill has been informed by extensive consultation with rating experts in the local government sector and the Valuation Office. My officials have also met a number of business representative groups to brief them on the legislative proposals. In general, business groups have welcomed the intent behind the proposals. They recognise that further improvements to rates collection levels are necessary, both to ensure that local authorities are equipped to provide services to the communities they serve and to ensure that compliant ratepayers are not subsidising those who do not pay.

A large body of case law is well established. Local authorities and ratepayers are, in the main, very familiar with, and generally accepting of, the operation and practice of the rating system. Notwithstanding that, some changes to the system are necessary, both to ensure that rates collection mechanisms keep pace with other changes to the business and commercial world, and to facilitate more effective and streamlined enforcement procedures. This is crucial to ensuring that the responsibility of paying rates is spread evenly across the commercial and business community.

One intention is that this legislation will encourage ratepayers to engage with their local authorities and will mean that the annual rates bill is not low on the priority list for payment by individual businesses. This approach to rates often forces local authorities to rely on the courts to help collect moneys owed, with the additional resources that requires, not just for local authorities but also for non-compliant ratepayers.

That leads me to the reasons this Bill is considered necessary. In 2015, the Department of Public Expenditure and Reform established the debt management project board. Both my Department and the local government sector were represented on the board. Early in the board’s work, it became apparent that one of the most significant areas to be addressed was the high level of debts relating to commercial rates levied by local authorities. The board also identified that the lack of enforcement powers available to local authorities was a barrier in reaching the level of compliance being achieved by the Revenue Commissioners in tax collection. A business case for greater enforcement powers was prepared by the local government sector and endorsed by the project board. Among the key proposals identified in the business case were recommendations that additional powers be made available in the following areas: the ability to use the Revenue sheriff to collect unpaid rates; and the introduction of a rates compliance certificate, which would become a requirement when applying for statutory licences, State grants and public contracts.

In the period to 2014 percentage collection levels of rates declined, impacting on the financial position of local authorities and their capacity to deliver services. At that time, the collection of rates amounted to 77% nationally. In response to this, the local government sector established a debt management group to address debt collection by local authorities nationally. A project was put in place to address collection performance with increased targets set for each local authority. Every authority was required to adopt policies on debt management and a training programme was developed for staff working in this area.

Local authorities are fully aware of the difficulties that many businesses faced in recent years and have worked with those businesses to agree flexible and realistic payment plans. In recent years, up to and including this year, my Department has requested local authorities to exercise restraint in setting the annual rate on valuation, ARV, in recognition of the difficult circumstances facing many businesses. Notwithstanding the pressures on their own finances, local authorities adhered to these requests. The national average ARV has not changed significantly in recent years. The national average ARV decreased slightly each year from 2010 to 2015 and has increased slightly each year from 2016 to 2018.

The focus of the legislation is, in part, to address those who will not engage with the local authorities. The Bill is not about increasing rates or punishing those who engage with their local authority and endeavour to pay their rates. I intend that enforcement proceedings will not be taken unnecessarily by local authorities and will be reserved for those who refuse to engage with the local authority on determining a payment plan. The current legislative proposals support the payment of rates by removing the requirement for businesses to pay their rates in two moieties and allows for payment plans to be agreed with local authorities to make payments in instalments.

As outlined, commercial rates are worth approximately €1.5 billion annually to the local government sector. Given the structure of Ireland’s local government funding model and its reliance on commercial rates, the determination of the ARV is one of the key responsibilities of the elected members of local authorities. These authorities have a statutory obligation to levy rates on property used for commercial purposes, in accordance with the details in the valuation lists prepared by the Commissioner of Valuation. The ARV decided by local authority members annually is applied to the valuation determined by the Valuation Office to calculate the amount payable. Rates are generally payable by the occupier of a commercial or industrial property. Income from rates makes an important contribution to the cost of day-to-day services provided by local authorities such as roads, public lighting, development control, local enterprise support, parks and open spaces. These are all essential elements to help create and maintain the environment in which businesses can prosper.

The amount of rates a ratepayer is levied is determined by two factors, namely, the ARV adopted by the council at its annual budget and the rateable valuation of the commercial property the ratepayer occupies. The legislation providing for the valuation of properties which had dated back to the 1850s has been streamlined and modernised under the Valuation Acts 2001 to 2015. No complementary modernising of rating law has been enacted to date and this is very much the focus of the Bill before us.

While rates and valuation matters are connected, they are also distinct functions and the Commissioner of Valuation is entirely independent in the exercise of his functions. Notwithstanding this, the Local Government (Rates) Bill is one aspect of a broader consideration of this general area. The Valuation Office is currently engaged in a national programme to revalue all commercial and industrial properties in Ireland. The purpose of these revaluations is to bring more equity, fairness and transparency into the local authority rating system for non-domestic property.

Completing the first revaluation since the mid-19th century and getting properties in every local authority area onto the subsequent five to ten-year rolling cycle of revaluations which is provided for in the legislation represents a sea change and fundamental modernisation of the rateable valuation system. The purpose of a revaluation is to redistribute commercial rates liabilities among ratepayers based on up-to-date market rental values. Following revaluation, there will be a much closer relationship between contemporary rental value and commercial rates liability.

My Department is also conducting a periodic critical review of the Valuation Tribunal. The tribunal was established in 1988 to consider revision appeals.

Between 1998 and 2013 the average number of appeals received was 224 per year. However, the national revaluation programme has had significant consequences for the workload of the tribunal, which received 1,375 appeals in 2017. Such an upswing in the number of appeals has inevitably led to delays. Indeed, there have been quite a number of parliamentary questions from Deputies on the matter. The review includes evaluation of the organisational capacity and performance of the tribunal. This will assist in streamlining and creating efficiencies throughout the appeals process, which in turn will lead to a faster, more robust process. A review of the Schedule 3 exemptions of valuation under the Valuation Acts 2001 to 2015 is also commencing within the Department. It is the intention that the results of that review will be included, if possible, in this legislation on Committee Stage.

It is not the purpose of a revaluation to increase the total amount of commercial rates collected by local authorities. Section 8 of the Local Government (Business Improvement Districts) Act 2006 provides that a ministerial order must be made directing a rating authority to limit the overall amount of income it can raise through rates in the year following a revaluation to the total amount of rates liable to be paid to it in the previous year, plus buoyancy, that is, arising from valuations determined in the year of a revaluation of newly constructed commercial or industrial property, adjusted for inflation as measured by the CPI. Further orders will be made later this year in respect of the local authorities currently undergoing revaluations.

It is notable that there has been very little empirical evidence of an increase in the overall amount of rates paid by businesses in recent years. The total amount of rates accrued to local authorities, as reported in local authority annual financial statements, has remained stable at or just below €1.5 billion per year since 2010. Analysis on the impact of rates on business costs is limited. The analysis that is available concludes that commercial rates represent a small portion of overall business overheads compared with energy, rents, payroll and other inputs. By way of example, local authority data in 2016 indicated that 70% of businesses nationally are paying less than €5,000 per annum in commercial rates.

I will now turn to the provisions of the Bill. Rates legislation is currently spread over more than 20 separate enactments dating back to the Poor Relief (Ireland) Act 1838. A modern enactment will simplify the legislation, will be more efficient to implement and more easily understood by ratepayers. Other measures include simplifying the process by which rates are levied and collected, strengthening the power of local authorities to collect rates and providing powers for the local authorities to introduce targeted rates alleviation schemes. The general scheme of this Bill was referred to the Joint Committee on Housing, Planning and Local Government for pre-legislative scrutiny in November 2017. Following a briefing by the Department, the committee decided to forego pre-legislative scrutiny of the Bill.

Section 1 provides for the interpretation of terms used in the Bill. Section 2 provides clarification on the local authority’s role in the adoption of the annual rate on valuation. Section 3 provides that a local authority shall consider the local authority’s budgetary needs in determining the applicable annual rate on valuation. Section 4 provides the power for local authorities to levy rates on the occupiers of relevant property, as identified in Schedule 3 to the Valuation Acts 2001 to 2015. It restates the longstanding provisions that the commercial rates liability is calculated by multiplying the valuation determined by the Commissioner of Valuation by the ARV adopted by the local authority at its budget meeting. Section 5 provides a power for the Minister for Housing, Planning and Local Government to limit the level of ARV that can be adopted by the local authority. Section 6 provides that local authorities may offset any rates owing to them against an amount that the local authority owes to that party. Section 7 provides that the collection of rates and interest due on unpaid rates pursuant to this Bill are under the care and management of the local authority. Section 8 provides that a local authority may provide a temporary abatement for vacant properties, subject to any maximum relief which may be specified by the Minister, to ensure that all property owners, other than those whose rates liability would be below a de minimisthreshold, make some level of payment to the local authority.

At present, the legislation governing rates provides that a local authority may provide up to 100% relief on rates where a premises is vacant, either due to renovation and repairs or because the owner is unable to find a tenant. Outside the city councils of Dublin, Cork and Limerick, which historically had separate legal provision enabling a refund of 50% of rates on vacant properties, the practice has generally been for the elected members to agree a 100% relief. However, since the introduction of the Local Government Reform Act 2014, a number of local authorities have introduced less generous reliefs. In fact, one of the local authorities in the north east has introduced a 50% relief threshold. The lack of any charge on vacant premises may act as a disincentive for the property to be put to its best use. I am sure all Members are aware of premises in town centres or on the outskirts of towns that have been vacant for many years. The lack of a charge on such premises may act as a disincentive to finding a tenant and putting the buildings back into use. Vacancy refunds also introduce a level of uncertainty regarding the revenue the local authority can collect. The provisions contained in the Bill allow the Minister to prescribe, by order, a maximum level of refunds to be provided, with provision that this amount can be further reduced by individual local authorities. To incentivise the elected members, it is proposed that the revenue accruing from any further reduction in the vacancy refund beyond this level would be added to the general municipal allocations of the municipal districts in the local authorities.

Section 9 provides local authorities with the power to establish a database of relevant property and the power to delegate this function to the Local Government Management Agency, LGMA. Section 10 provides an obligation on the owners and occupiers of relevant properties to provide to the local authorities information that the authorities may require to discharge their functions under the legislation. Section 11 provides local authorities with the powers to apply interest to unpaid rates. The provisions are based on the provisions in the Taxes Consolidation Act, which provide for the addition of interest to unpaid taxes to the Revenue Commissioners, and in this respect aim to see rates treated on a similar basis. The interest would accrue from 1 January of the following year and only apply where a ratepayer refuses to enter into an agreed payment plan with the local authority. As such, the provision is focused on incentivising engagement with the local authority rather than increasing revenues.

Section 12 provides for obligations on the owners of a relevant property, before the sale of that property, to pay any rates payable by the owner to the local authority, including any interest on unpaid rates. This provision only applies to rates liabilities accrued by the owner when the owner is also the occupier of the property. Section 13 provides that any unpaid rates and any interest accruing on unpaid rates shall be and remain a charge on the relevant property where the owner of the property is the person liable for the rates. Section 14 provides for local authorities to introduce rates alleviation schemes to support specific national and local authority policy objectives. This could include objectives contained in Realising Our Rural Potential: The Action Plan for Rural Development, local economic and community plans developed by local authorities and planning objectives set out in development plans and local area plans. This could be a mechanism for allowing municipal district members to introduce alleviation schemes to reinvigorate town and village centres across the country which in many locations have been disrupted, to say the least, by the construction of large out-of-town developments. The legislative proposals provide that it would be a function of local authorities to develop and introduce schemes appropriate to the priorities in individual local authorities and in line with any regulations made by the Minister governing the parameters and operation of such schemes. The approval of schemes would be a reserved function of the elected members.

Section 15 provides for the appointment of local authority staff as authorised officers by the chief executive for the purposes of the Act. Section 16 provides those local authority staff appointed as authorised officers by the chief executive with the power to enter relevant property in certain circumstances. Section 17 provides that the Minister may make regulations under the Bill, when enacted, where relevant. Section 18 is a standard provision relating to expenses in the administration of the legislation. Sections 19 to 22 are technical amendments to various enactments on foot of this Bill. Section 23 provides for the repeal and revocation of various provisions of rating law to be replaced by the new provisions. Section 24 is a standard provision in respect of the Title to the Bill and for the commencement of the various provisions contained in the Bill.

I want to signal to the House that I will be bringing forward a number of amendments on Committee Stage. I have already mentioned the Schedule 3 review. These amendments could not be finalised for inclusion in the Bill as published but they are currently being examined. They include: recourse for local authorities to have the power to issue a certificate for collection to the court appointed sheriffs; issue by the local authority of a rates compliance certificate; to address the powers for local authorities to take legal action through the courts; and to amend the provisions of section 56 of the Valuation Acts 2001 to 2015 relating to a rates limitation order in the year following a revaluation of a local authority.

As I mentioned earlier, with the exception of the removal of domestic dwellings and agricultural land from rates liability in 1978 and 1984, respectively, only minor changes and adjustments have been made since 1838 to the operation of the rating system. This Bill is the first significant piece of rates legislation to be proposed in many years and given the importance of rates income to the funding of local government, it is sensible to modernise the fundamentals of commercial rates.

6:40 pm

Photo of John LahartJohn Lahart (Dublin South West, Fianna Fail)
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I call Deputy Cassells, who is sharing time with Deputies Casey and Michael Moynihan.

Photo of Shane CassellsShane Cassells (Meath West, Fianna Fail)
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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.

Photo of Pat CaseyPat Casey (Wicklow, Fianna Fail)
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I want to put on the record that I am a commercial rates payer and I have been paying rates for a significant number of years. I welcome the Bill. As pointed out by Deputy Cassells, it is a start but we have a long road to travel. I want to focus on particular aspects of the Bill, starting with the alleviation scheme. This is a positive move from a democratic point of view and the restoration of some powers to the local authorities, which is vital. No two towns in any county are the same. In my own county, Greystones has one of the highest occupancy rates while Arklow has one of the lowest. There are different challenges in west Wicklow, between Blessington and Baltinglass, and Wicklow town. There is a diverse range of issues across the country and no one solution will fit all. This is an important provision of the legislation. Equally important is that local authorities can bring policy into their local area plans, county development plans and local economic community plans. It is a pity all of these were adopted in 2014 and that we will now have to review them. From a democratic point of view, and the restoration of power to our councils, this is positive and I support it.

The provision relating to preliminary valuations is positive from a revenue generation point of view. The local authorities will have the power to make a valuation on a property even though it can be challenged when the Valuation Office determines its valuation of it. The Bill also provides for temporary abatement.

From my reading of this Bill there is talk about having a minimum abatement on properties which we could probably debate further. Much of what I am looking at here in the Bill is about the collection of the money for commercial rates. As a commercial ratepayer, I believe that everybody should pay their rates. It is not just commercial rates but when one looks at local authority collection of finances across every section of finance there is a very poor collection rate involved. That is not reflected in this document where the local authorities are not taking their responsibility for their lack of professionalism in collecting monies due to them. A lot of this involves a mindset within the local authority which says that it does not matter because they can put a burden on the property. We can let it flow into eternity. As soon as the commercial operator goes to sell the property, all of a sudden it hits them like a bang. What has come to the fore in the light of the recent recession - this is a section in the Bill which disappoints me - is that some of the financial institutions took over commercial properties because the business was gone. These institutions inherited the commercial debt that was on these properties. When they sold them on, they never paid that rates bill. Some financial institutions passed those bills on to the next owner, which put the viability of that business in jeopardy. I have some examples in my county were some person had a ten year bill which they had to pay and it put that business in jeopardy.

This is a start but we are all aware that the elephant in the room that we have to tackle is the valuation process for properties. There is a huge mystery to it for all commercial ratepayers. There is not a great understanding of how it works and even after having been in the local authority for 12 years I still do not understand how my property is valued today.

The biggest challenge is the revaluation process which started in 2008 and still has not been completed 11 years on. The whole valuation system is so archaic. Wicklow went through its revaluation process last year. All commercial ratepayers in Wicklow are about to find out in the next month to six weeks their projected new valuations.

6:50 pm

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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The Deputy's phone is going to be busy.

Photo of Pat CaseyPat Casey (Wicklow, Fianna Fail)
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My phone will be busy and I am worried myself. My property has not been revalued for 30 years. What are the implications for me? I could be looking at a 30% or 40% increase in the commercial rates. Can I sustain that in one bang? No, I cannot. There is nothing in this Bill to allow that charge to be harmonised over a period of four to five years. We, including Deputy Cowen, have stated that previously. There has to be some way of allowing businesses to take that shock out of this cost and to give them time to adjust.

I will allow Deputy Michael Moynihan to come in. We are supporters of the Bill and the way it is going but there is an awful lot more to be done. We all know that the elephant in the room is the valuation process. This Bill does not go near that. I equally do not understand how this is handled in the Department of Justice and Equality.

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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It has just been moved there.

Photo of Pat CaseyPat Casey (Wicklow, Fianna Fail)
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That is grand.

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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I thank my colleagues, Deputies Casey and Cassells. While we welcome some of the initiatives in the Bill, the Local Government (Rates) Bill gives us an opportunity in the House to reflect on rates, ratepayers and how that has been ordered over the last period of time and is going to be ordered over the coming time. There is no doubt that we are at a major junction in relation to retail, to towns and villages and how they operate. Some towns have almost ground to a halt with businesses closing and empty spaces, shopfronts and retail units. We hear time and again about small businesses which in some instances do not have a major footfall and the owners talk about the rates bills they receive. The other argument heard is that rates are not reflective of turnover. There is a whole raft of issues concerning funding and how these rates developed over the years. Deputy Casey is, of course, correct on the issue of the revaluation and that process which is going to come down the tracks. Anywhere that has been revalued has involved the foisting of enormous costs and increases on businesses.

There is an opportunity here for us to reflect on rates and on the funding of local government and how we look at traditional market towns. Towns like Charleville, Kanturk, Millstreet or Newmarket, serviced major hinterlands over the years and they developed, grew and were allowed to flourish and reflect the countryside and the services that they provided to the people, but that has died out. Some of those retail units had been there for generations and were very successful and involved extremely hard work. The way online retail and the other challenges that have arrived to their doors is worth mentioning. We are at a junction as to how our market towns are going to survive into the future. There has to be a new vision as to what units will be in these towns and how we will encourage people to come into them. We have seen a lot of out-of-town planning. We have seen a lot of the major retail units moving out of the towns and changing the town centres, with resulting decay. We have to be very innovative as to how we are going to revalue them.

Some 20 years ago the town renewal scheme came into being and it was an initiative to try to develop towns. A lot of the towns that were granted the town renewal scheme benefitted from it. Units that had decayed and fallen into disrepair were given a tax incentive to try to develop them. It dates from 1999, almost 20 years ago. What happened was that the development that took place and the tax incentive to develop it, with the building materials and work, ended up being virtually cost neutral to the Exchequer. The benefit from it 20 years ago is reflected in towns like Kanturk and Charleville.

We need to be very innovative again to meet these challenges. We can discuss tax and rates scheme in isolation and say that we need better efficiency in terms of collection and such issues. There is also a bigger discussion which is to ensure that we are bringing all of our towns with us. We cannot allow them to die out. We have had discussions in different parts of the country where county towns have almost disappeared, with a loss of identity and business units. On the east coast there are massive housing developments with almost dormant towns, or towns that people are commuting long distances from. We must try and ensure that any initiative we have under this Bill or any other Bill does not have this effect.

As we are discussing rates, how are we going to incentivise people to move into the units that are now vacant in every town in the country? What do we need to put in place? Is it to empower local authorities to give a rates rebates scheme? Is it to empower local authorities to identify the crisis? Some people would say that we have to take stock. Every public representative here, whether they are representing urban or rural Ireland, understands the challenges in retail. We have to go very deeply into it, back to the drawing board and back to a town renewal scheme as existed 20 years ago to give a huge initiative to the rural towns that I represent.

There is a great need for those rural towns to flourish and to be kept alive. We have seen the fantastic education facilities in these county towns. The quality of life people can get from living in these communities is second to none but we have to give a massive incentive to show that we - the State, the Government and the Dáil - want these towns to continue to flourish. If they do not, the countryside around them will decline. As we know the challenges that are coming in regard to agriculture and the future of agricultural communities, we must make sure we keep these towns alive.

The Minister of State suggested he intends to bring forward amendments to the legislation. He needs to be very innovative in making sure that whatever is done in regard to the collection of rates, we have at the heart of it some initiative to keep these communities and county towns alive.

7:00 pm

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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In common with other colleagues, I welcome the Bill. While its provisions are limited, they are broadly very sensible and Sinn Féin, like others, will be supporting the legislation. On one of the most obvious areas, the idea people could not pay their rates in instalments made no sense. Like others, when I was on a council, I was trying to negotiate for an individual ratepayer who was trying to do the right thing and keep his staff in employment, as well as being rates-compliant. The fact one could not negotiate that kind of agreement was something that needed to be rectified.

The alleviation schemes are most welcome. There are local authorities that had previously found very ingenious ways of introducing what were effectively alleviation schemes. They did so legally but they had to go through a certain amount of policy and legislative subterfuge, which was never the ideal situation, as I know from having been on one such local authority and having been involved in designing the scheme. The fact local authorities and municipal districts will have the power to try to make sensible interventions, particularly to try to boost parts of their constituencies that have less economic activity or parts of towns that are experiencing lack of regeneration, is welcome.

The difficulty, of course, is there could potentially be a loss of revenue for the local authority and, therefore, it is important to acknowledge that while it is a valuable power, it comes at a cost. This will need to be teased through by the local authorities and it may limit its applicability in certain areas. Nonetheless, it is very welcome.

The one provision I do not understand is in section 5 in regard to the ministerial limit on the annual rate on valuation, ARV. In his concluding remarks, perhaps the Minister of State could talk us through its logic. While I am not arguing for local authorities to be reckless or to have excessive increases in the annual rates, if elected members are given the democratic power to make those decisions, I am not sure I am comfortable with the idea of a Minister having the right to intervene and, for example, to set limits or seek to lower that rate. I certainly would need some persuasion before I would be willing to support it.

I listened with interest to Deputy Cassells's proposals for amendments and, on the basis of what he said, a number of them seem very sensible. Subject to viewing them, I believe they certainly could win our support. While it is not a proposed amendment but an issue Deputy Cassells raised, I would sound a warning in regard to the issue of taking power from local authorities and giving it to Revenue. It is not that Revenue is better at collecting money but that it has much stronger powers. If we give those stronger powers to another body, clearly it would be able to get a higher collection rate. I am not at all arguing that local authorities should be soft on non-payment. However, during the height of the recession, particularly in the west, individual local authorities and rates officers in local authorities made very sensible, pragmatic calls that were about saving jobs. It was not that they were saying they would not collect the rates. However, if pushing the rates at a particular point in time would have resulted in the loss of two, three or four jobs in a small village or rural area, they did the sensible thing. One of the values of local authorities having the appropriate powers is that they are often better placed to make some of those difficult, more nuanced calls than a centralised authority. I am not arguing with the Deputy; it is just that I think there are two parts to this story of which we need to be mindful. However, I would not necessarily be against local authorities having greater powers, which would allow them the discretion to decide when best to use them.

One of the frustrating things when we were dealing with the pre-legislative scrutiny of this Bill was the separation of, as it was then, the Commissioner of Valuation, the ARV legislation and collections for the local authorities. It is not that I would want in any way for us to interfere in the independence of the commissioner but we could not even have a joined-up policy discussion on legislative reform or policy reform. The decision to move the Valuation Office into the Department is eminently sensible. Of course, it begs the question as to when we actually can have that joined-up, broader discussion around the interaction between the two areas.

Let us be very clear. Any change to the valuation system has a knock-on effect on the revenue coming in to local authorities. It would be very easy for Opposition Members to come to the House, although thankfully no one has done it, to just demand that we have some easing of the revenue base for businesses without acknowledging this would have a significant knock-on effect on the local authorities. It would not just affect their current revenue. The great thing about the rates is they are consistent and not subject to the ebbs and flows of the economic cycle, and they give a level of certainty to the local authorities. While this is one of the difficulties for small struggling businesses, it is of value. However, we need to have that joined-up discussion.

I agree with Deputy Casey that the valuation process is complex. I spent quite a lot of time with two senior officers from the Valuation Office when we were doing the pre-legislative scrutiny of this Bill just to understand it. I am not stupid and while I am not the smartest person in the world, I can get my head around concepts. However, it took me a long time to really understand it and I still do not fully understand the variances between town centre and out-of-town and so on. The thing that catches people out when the valuations happen is the interaction between the setting of the rates and the valuation. The data the Valuation Office was giving me at the time showed that when a revaluation was done, the majority of ratepayers remained roughly the same but there were two groups of people at either end - the winners and the losers - and it is almost the same percentage in every valuation after ten years or more. While the winners are very happy and do not say anything, some of the losers lose very significantly. From the information I have, it is not that there are more losers in some counties than in others and it seems to be relatively consistent. However, we need to have a significant look at how that interacts and whether there are mechanisms for reducing the number of losers, particularly losers whose business is put into some level of jeopardy. I would be open to ways of thinking about that.

Part of our problem is the long gap between the valuations, so the more frequently they could happen, the easier the system. However, that has significant revenue implications in terms of staffing and resourcing, and while the Valuation Office was working very hard to get through its schedule, it will be 2021 or 2022 before it will have the full State-wide valuation done. We would not even have had a five-year cycle when people would be valued again, so there will still be a long delay, which is a problem.

We need to revisit the valuation criteria for town centres and out-of-town shopping districts because there is clearly an inequity. This refers to the points made by a number of Fianna Fáil Deputies about the difficulties of town centre businesses for which the rates are much more expensive. While I accept the Minister of State said the rates might be a smaller portion compared to other things, it can often be the thing that tips them over the edge or convinces a prospective small business person to locate in a particular location or not. This is an issue worth looking at.

In conclusion, we will be supporting the Bill bar that one section, subject to the Minister of State's response. I would like to see a grounded and joined-up discussion in the housing committee within the next six months, which the committee would certainly facilitate, where we would bring in the Minister and the staff but also the Valuation Office to start that broader conversation. I will be honest. Many of us will complain that the system as it stands is not fit for purpose but none of us have the solution. In fairness to the Deputies who have spoken, they made sensible proposals. Nonetheless, nobody has worked out a system whereby we marry the needs of the local authority to the needs of business, particularly small, struggling businesses.

Photo of Shane CassellsShane Cassells (Meath West, Fianna Fail)
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They have become so big.

Photo of Eoin Ó BroinEoin Ó Broin (Dublin Mid West, Sinn Fein)
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It is a tricky thing to do. If we sat down at committee and worked our way through it in that collegiate spirit in which we have been working on a number of issues with the Minister, we might find some good suggestions and good ways. Even if we cannot deal with some of the bigger stuff in this Bill, and I am of the view that we probably cannot, I would like to see the committee and the Minister return to those broader issues. I would hate to see us pass this Bill and for all of us to say we want significant reform but then to be here in two or three years' time with nothing else having happened.

Perhaps that is something we could consider in the committee and we could invite the Minister and the relevant officials in at a later date.

7:10 pm

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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We too will be supporting the Bill. It is a welcome opportunity to have this discussion because there are many issues that are very worrying. I refer, for example, to the revaluation process in particular. Other Deputies have raised the matter and the fact that valuation was not done for such a long time. Since the process started, it has caused difficulty for those whose valuations went up and they are the ones who raised the issues. For others, the valuation did not change very much or in some cases it went down. It is a difficulty for many businesses when their rates go up significantly. I accept we are dealing with the Local Government (Rates) Bill rather than the Valuation Act 2001, but it is welcome that both are at least in the same Department as they are interconnected and affect businesses in all cities, towns and villages.

The Minister of State, Deputy Phelan, said that what analysis is available concludes that commercial rates represent a small portion of overall business overheads compared with energy, rents, payroll and other inputs. That said, I wish to argue again for the small towns and villages where businesses might not have a very big turnover and properties are generally owned, which means there is no rent to pay. Most of these businesses have a small number of employees so the payroll bill will not be significant. In such cases, rates can make a major difference in terms of the viability of certain businesses. My colleague, Deputy Penrose, has been making that point about his constituency and small towns and villages around the country where such businesses are the lifeblood. While rates are not significant for a big business in a city, they are significant for those businesses and we must try to be as sensitive as possible.

Rates make up about 35% of the income of local government, so they are really important. We must ensure we maintain that kind of income base for local authorities. On the other hand, we must balance that against keeping businesses viable because they are the lifeblood not only of towns and villages but also of cities. We must try to get the balance right.

Deputy Casey made the case for moderation in terms of how soon the money must be paid in cases where valuations go up significantly. In that context, I welcome the removal of the two moieties in favour of staggered payments over the course of the year. That makes complete sense because it makes it much easier for businesses to meet their payments in a way that works for their turnover and the availability of funds. That change, therefore, is welcome.

While it is not in the Bill, the Minister of State noted that the Department is conducting a periodic critical review of the valuation tribunal. That relates to the valuations that are currently being carried out in various local authorities. Some of us received correspondence from owners of forecourt stations who argue that the system is not being very fair to them. They make the point that they have to take individual cases and are unable to take a class action which would be more helpful. I do not know whether the Minister of State can respond on that point as it is not strictly within the parameters of the Bill, but it is very much related to it.

I also wish to raise the provision whereby one can get a rates alleviation waiver to support specific policies. There is also the abatement of rates for vacant properties. The waiver scheme to support specific policy objectives related to development plans and local area plans, among others, should give scope for town and city centres to be prioritised. Perhaps the Minister of State could address the issue in his response. On many occasions we had debates on businesses in city and town centres having difficulty competing with out-of-town shopping centres where parking is generally free. Is there a way in which that could be addressed because generally in development plans and local area plans one has a provision to emphasise town centres? In the implementation of planning in accordance with development plans local authorities generally favour city and town centres because of the doughnut and other negative effects of out-of-town centres.

In terms of the abatement of rates for vacant properties, the Minister of State said section 8 provides that a local authority may provide a temporary abatement for vacant properties subject to any maximum relief, which may be specified by the Minister to ensure that all property owners other than those whose rates liability would be below a de minimisthreshold would make some level of payment to the local authority. He then referred to the 100% relief versus the 50% relief in some cities. The Minister of State stated later that the lack of any charge on vacant premises might act as a disincentive for the property to be put to best use. He said that there may be a maximum level of refunds to be provided, with the proviso that the amount could be reduced by individual local authorities. I wish to tease out whether the length of time a property is vacant can determine how the abatement is done. I am thinking of large supermarket chains – I will not name any – that leave premises empty for years in the middle of a town or city for commercial purposes. There is one in my city at the moment that is the subject of public debate. These companies deliberately leave the premises vacant. I am all for the abatement of rates where a property is vacant because the person who owns it cannot run a viable business, sell it or deal with it in a way that works for him or her, but where it has a detrimental effect on the area and where there is a commercial interest involved in keeping out competition, abatement of rates should not be available. Is there flexibility for a local authority to address the issue and not to incentivise premises being left vacant for a long period?

I also wish to raise the exemption of Government offices. Until the 1980s, rates were paid by Government offices. It can cause financial loss to local authorities when a State building, often a large one, is not subject to rates. Does the Minister of State have any intention of addressing that matter? I am not sure if it comes under the competence of the Bill but it is again one that should be addressed because it has a negative effect on the amount of money that comes in to local authorities, particularly in Dublin. Perhaps the Minister of State could address that issue as well.

Overall, the Bill is positive. The Minister of State said he would table amendments, which seem to be largely related to enforcement. The helpful document from the Library and Research Service indicates that while the explanatory memorandum states the Bill will form the basis for greater enforcement powers by local authorities in their collection of rates, it does not contain any specific enforcement provisions other than those relating to the appointment of authorised officers under section 15. From what the Minister of State said, the amendments he will bring forward will strengthen the powers, including recourse to certificates for collection by the court appointed sheriff. We look forward to debating that issue with the Minister of State.

A table in the Library and Research Service document shows the collection percentage for various local authorities. Some of them are a good bit lower than others. I am not too sure if there is any good reason for that, apart perhaps from the willingness of the local authority concerned to go after those who are not paying.

It is not fair on those who do pay and struggle to do so if others get away without paying. I refer to those who face no huge difficulty but simply do not pay. That is something that needs to be addressed. I have the table here. There is a 96% collection rate in Fingal, and that figure ranges down to 68% in Donegal and Louth. There is a big variation in between. Maybe there are good reasons for that, but there may also be situations where local authorities are just not collecting although it is possible to do so. As I said, this is very unfair on the businesses which struggle to pay the rates but still pay them. We look forward to further debate and to hearing the Minister of State's response.

7:20 pm

Photo of Thomas PringleThomas Pringle (Donegal, Independent)
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It is topical that we are discussing the Government’s Local Government (Rates) Bill 2018, which proposes to modernise and consolidate existing legislation governing commercial rates in Ireland, because in spring of last year I carried out an extensive survey measuring the health and optimism of the small business sector in County Donegal. More than 100 businesses responded, painting a stark picture of the continuing struggles small businesses have faced since this Government came to power. I felt it was time to measure the health of this sector and to listen to businesses and their concerns. I believe that measuring the health of the microbusiness sector measures the overall health of the rural economy. Local businesses are the backbone of rural economies, providing sustainable local employment if supported. My priority was to concentrate on small businesses which fall outside the remit of Enterprise Ireland as they are not primed for export. Coffee shops, hairdressers, butchers and many more types of businesses contacted me via the survey. Some respondents said it was the first time they were ever asked about their concerns.

The results suggest that while businesses are emerging from a disastrous decade of austerity, they are now facing new and existing challenges left largely ignored by the current Government. Only half of respondents said their business has improved since the recession, indicating that Donegal’s rural economy continues to struggle. Most striking was that more than 80% of respondents said they were concerned with depopulation trends and the retreat of rural services like post offices, Garda stations and even banking facilities in Donegal. Some 80% of businesses also cited a general unawareness of Government supports, with many reporting various challenges left unaddressed by the current Government.

Many businesses gave me an extensive response outlining their main challenges. Most of them mentioned commercial rates, pointing to high rates or an inability to work out a long-term sustainable agreement with the local council and persistent anomalies in the rates assigned to businesses across the county. That applies across all sectors and all types of businesses. They all had the same response. In fairness, it is difficult for the local authority as well. The rate is not set by the council. The council has to collect the amount that is set. It can and does agree on deals with ratepayers who are experiencing difficulties. The problem is that at the end of the year, the council must still levy the full amount from those businesses. This is very frustrating for business people. They do deals and get reductions of 50% or whatever it is. Then the council sends them letters twice a year demanding the full amount and threatening all sorts of penalties. A trader may have already concluded a deal a couple of weeks previously, but that does not matter. Legally, the council must go down that road. That is very difficult.

There are all sorts of anomalies in the rates system. There is a hotel in Glencolumbkille which has been closed for many years. That hotel paid the same rates as two hotels in Ballyliffin, where the Dubai Duty Free Irish Open was held last year. There is a world-class golf course in that town, and two hotels pay the equivalent of one hotel's rates in Glencolumbkille. That is nonsensical. I also know of one pub in a rural village in south Donegal which pays twice the rates of a similar pub in a village in Inishowen. This insight is derived from just a half an hour spent looking at valuation reports at Valuation Office Ireland and going through businesses I know. If I can pick out these anomalies, they can be found right across the county. There is no consistency in how rates are levied or in the amount demanded. This is visible when comparing towns and villages of similar sizes. That is a real problem right across the board. Unfortunately, this Bill does not do anything to address that, but it is something that needs to be addressed. Local authorities also need the freedom to set and collect the rates themselves, outside the control of the national office. There may be historical reasons for which the national office was founded and rates have been managed in this way, but we need to move on.

My understanding is that the current Bill seeks to reform some aspects of the management of commercial rates. While I welcome some of these aspects, the Bill is vague on how it sets out to achieve worthwhile reforms. For example, the explanatory memorandum for the Bill states that it will "form a basis for greater enforcement powers by local authorities in their collection of rates", yet there is no mention of any specific enforcement provisions other than those relating to the appointment of authorised officers under section 15.

Section 14 provides that local authorities may introduce a scheme to provide a waiver for all or a portion of the rates due to support the following:

(a) the implementation of the National Spatial Strategy within the meaning of the Act of 2000;

(b) the implementation of a development plan within the meaning of the Act of 2000;

(c) the implementation of a local area plan within the meaning of the Act of 2000;

(d) the implementation of a local economic and community plan within the meaning of the Act of 2001.

Again, very little is explained on this point, but I hope to see local initiatives being able to access this waiver scheme. One strong point that emerged from my business survey was the reliance of businesses on local trade and not just tourism, although that is important. They are mainly sustained by local traffic, local residents and people from the local area. It is evident from my business survey that more focus needs to be placed on driving up local trade to help small businesses survive new challenges. Any time I mention this issue to the Minister, the Government is quick to point out supports for businesses in tourism, even though my survey showed that nearly 80% of businesses rely on local trade. This is where we need to be focusing. I hope the reform of the rates system will help that in some way. If this could be made part of a local economic and community plan, we could see rates being reduced for those businesses that continue to struggle with the trend of reduced local trade caused by rural depopulation.

Section 11 provides for the levying of interest on any overdue rates. This section provides that any rates levied by a rating authority will carry interest from the first day of January in the following year in the event of failure to pay. This is a new provision which was not provided for in previous commercial rates legislation. There needs to be a mechanism whereby local authorities can legally restructure payments of rates, just like the mechanism we are calling for to operate between banks and lenders, particularly homeowners. Essentially I am describing a restructuring. Many businesses have an unofficial arrangement with local councils to delay or restructure rate payments, but businesses are then charged halfway through the year because this is what the council is legally obliged to do.

It is clear that Ireland has a rates problem. According to a public policy study carried out in 2016, only four local authorities had collection rates at or above 90% in the year 2016. Two collected less than 70%,my own county of Donegal and Louth. Furthermore, the study stated that outstanding year-end arrears for 2016 were in excess of €297 million, twice the arrears found in 2008, which amounted to €137.2 million. Overall the end-of-year arrears increased threefold between 2008 and 2012. Rates arrears are a legacy issue stemming from the recession, when rates were not collected due to very challenging times. This has been carried over, causing a backlog for individual businesses. Clearly we have a problem which this consolidated legislation will not resolve. It is safe to say that Ireland has a real problem with the issue of rates, both from the point of view of businesses and county councils themselves. This is something we very much need to address. We need to consider offering local authorities greater flexibility in collecting the amount of rates a business can afford to pay at any time while also expanding local authority powers to abate rates where appropriate. Of course this will mean funding must come from other sources, but I can think of a few, such as multinational companies, that are exempt from rates altogether. If we started there, local authorities might have leeway in helping business through challenging times.

We need to do something before Valuation Office Ireland conducts a revision of existing valuations in the north west, including Donegal, which is due to take place this year. This is likely to see rates increasing as they have been in counties which have been reviewed. Ultimately, if the Government paid more attention to small businesses, it would know they have a lot of great ideas and have a better understanding of local economies than Fine Gael has been showing to date. It is time Donegal and rural Ireland got no less than a full cross-departmental commitment to addressing the continuing challenges facing small businesses in rural economies and to diversifying funding to meet the needs of these businesses and local communities.

7:30 pm

Photo of Michael CollinsMichael Collins (Cork South West, Independent)
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I am sharing time with Deputy Michael Healy-Rae. I welcome some of the changes to the Local Government (Rates) Bill because it is vital that our local businesses are supported in a positive manner that will allow them to continue to operate. It is high time that we finally see this Government shake up its act and start taking steps to support hard-working, self-employed people running their own businesses in these difficult and uncertain economic times.

Under this Bill we will see changes that will allow local authorities to be given the power to significantly reduce commercial rates for businesses in their areas. These measures will allow councils to introduce rate alleviation schemes, which potentially will reduce costs for local businesses. A major problem we have seen recently is business owners facing three or fourfold increases in their rates following valuations of their premises in the wake of the crash in property prices and the sharp recovery of recent years. These rates increases are crippling businesses. Our businesses are already struggling to keep their heads above water. Retail businesses are struggling with the competition from online sales and the modern trend whereby people have moved away from buying regularly and locally. A retail business cannot afford any rates increase in the current climate.

There was a time when our local villages and towns were full with retail shops such as clothes, sweet, hardware shops etc. For example, in my constituency area of west Cork, Ballineen was once a thriving village with numerous shops including clothes, shoes and furniture shops. If one could name it, Ballineen had it, and people travelled far and wide to come to those shops in the village. If one drove through the village of Ballineen today one would find it hard to believe it was once such a thriving village. The village has lost business after business, including the closure of the Ballineen post office last year. There are more derelict empty commercial premises than the current number of business that are left in the village trying to make a living. That is a sad sight to see and, unfortunately, it is not unique to Ballineen. It is a sight we see throughout the towns and villages of west Cork.

Last year, I saw a haemorrhaging of businesses throughout west Cork. To name a few, we had the closure of Long's shop, in Timoleague; Lordan's butcher shop in Ballinspittle; Hickey's food store in Kilbrittain; O'Driscoll's post office in Ballineen; AXA Insurance in Bantry; Desertserges post office in Enniskeane; the credit union in Drimoleague was meant to close; the Welcome Inn pub in Bandon; Drinagh's post office; Brady's Bar, Bandon; The Square Bar in Bandon; and the Creative U craft shop in Bandon. Many more business have closed their doors that I have not mentioned.

What has happened to rural Ireland? In the programme for Government, rural-proofing of all policies was to take place. It baffles me that rural-proofing was promised but in reality, something is seriously wrong in terms of rural Ireland when many rural businesses are haemorrhaging in such a short time. I call on the Government to protect rural Ireland and to start taking real action to protect the business owners in rural Ireland who are struggling to make ends meet. Where businesses in rural towns and villages are deteriorating, the remaining operating businesses should be given a reduction in their rates or a rates-free period during which time they could use that money to invest in their business and ensure their survival in rural Ireland.

Further, we need to look at rural pubs that were once the social hub of rural Ireland. These pubs can no longer keep their doors open. I mentioned the Welcome Inn pub, Brady's Bar and The Square Bar in Bandon - three pubs in one area that have closed their doors in the past few weeks. Surely it resonates with the Minister of State that we have a major problem in that regard. The Bill brought forward by the Minister for Transport, Tourism and Sport, Deputy Ross, has destroyed rural Ireland. Unfortunately, it was supported by most Members here without looking ahead at the consequences. Rural Ireland is on its knees and to get to this point, the Minister is codding the people by leading them to believe that this Government is following its promise of rural proofing its policies. The opposite is happening. The Government has neglected rural Ireland and pushed rural communities to the margins.

If this Government is serious about restoring rural Ireland to its former glory, it will make sure that rural pubs will be entitled to a waiver from rates until it resolves the current driving situation that is deterring many local people from enjoying an important social outing in the rural pub that is part of our heritage. The rural pub was always a hub for music and storytelling but now it is only a hub for tumbleweed to blow up and down on its floors because the Government has scared the people of rural Ireland into thinking they cannot come out even for a couple of hours to enjoy their local pub. This Government, along with the Minister, Deputy Ross, has nailed the coffin shut on rural Ireland. I will not lie down without a fight for the people of rural Ireland. I will fight to the bitter end.

We need to examine ways of encouraging start-up businesses in rural Ireland. Not only should the Government provide a direct free service to align new business with supporting information on grants etc. but that support system should be easily accessed. Further to that, all new businesses should be exempt from rates for their first 12 months of trading to allow them get up on their feet, so to speak.

Budget 2019 was very disappointing. It was an awful decision by the Government to restore the VAT rate on the tourism industry and increase it back to the rate of 13.5% from 9%. That is having a major negative effect on hotels, restaurants, cafés, hairdressing salons and other associated businesses. It is causing nightmares for hotels in rural communities in particular, which are struggling and basically have a business from May to September. Very few people will come inside their doors for the next number of months. Now they are being met with a hike in the VAT rate to 13.5%, which will result in many job losses and might even lead to closures. That will result in a massive loss of rates, so there are no winners in that regard. As the Government is adamant it will not reduce the VAT rate, I ask it to give a rate exemption for a number of months to all these tourism businesses. Already, the majority of them are low-profit businesses that rely on high turnover volumes to ensure profit is made. However, the VAT increase is negatively affecting the volume of people using those businesses. They are struggling to make a living, and many of them are making a loss. If we see the closure of more of those businesses, it will have a knock-on effect in terms of job losses. I appeal to the Minister of State to take action now and support these businesses by giving them a rates exemption for a period.

Another massive let-down was the increasing of the VAT rate to 23% on food supplements, vitamins and minerals. We have many wonderful health shops across west Cork but this Government refused to listen to those business owners when they begged it not to increase the VAT rate. I also contacted the Minister for Finance, Deputy Donohoe, at the time and pleaded with him not to increase the VAT rate because it could lead to the closure of many of those shops. We have seen a big uptake in the number of people caring for their health and 80% of people use health food supplements including vitamins, minerals, Omega 3 and superfoods. The Government has increased the VAT rate on these products, which will force some to stop buying them as they will not be able to afford them. As 84% of the population disagree with this VAT increase, when will the Government listen to the people who elected it? As it will not reverse this VAT increase it is only fair that it allows businesses such as health shops selling these products to get a rates exemption for a period. That is necessary for their very survival. It is the Minister of State's duty, as a member of this Government, to do all he can to encourage people to live as healthily as they can but instead the Government is putting financial obstacles in their way.

As I said, rural Ireland is haemorrhaging badly and it is very easy to see that. I have no problem bringing the Minister of State to west Cork and taking him to the towns and villages I am talking about. I think he knows west Cork very well. I would appreciate it if some consideration could be given to these businesses. I have said and will continue to say in this House that the Minister, Deputy Ross, has finished rural Ireland, and the Government should not have backed him because it will lead to a catastrophic loss of jobs in this country.

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry, Independent)
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I am grateful for the opportunity to speak on this very important issue. I must first declare an interest. I have been a ratepayer since I was 20 years of age. I believe I am perfectly equipped to talk about rates considering I have been paying them for a long time. I represent the ratepayers of the county of Kerry, who have an awful lot to say about the little they get back for the amount they pay in rates and the increases they have seen over the years. It is a simple fact that these people are creating the employment that is keeping our small villages, towns and larger towns going. We then have the bigger ratepayers, for instance, the hoteliers with the big hotels but just because they are bigger does not mean they are having an easy time; they certainly are not. In terms of the tax the Government has put on them recently, I was bitterly disappointed to see the increase in the VAT rate for the hotel and hospitality sector. It is true, as Deputy Michael Collins said, that this is having a negative effect on their businesses. Those people were already operating on a tight shoestring.

We must look at their wage bills and their insurance bills which are spiralling out of control. I want to highlight again how unfair the massive increase that people who own nightclubs, dance halls, restaurants, public houses and shops have to pay for their public liability insurance. It is because of predominantly bogus claims that are allowed to continue in this State, which we have debated here before. We have seen Ministers sitting idly by and silenced. It was as though they could see no evil or hear no evil because they have said nothing about the increase from 9% to 13.5%. There was no need in the world for that increase. It was wrong and I was so bitterly disappointed that it was allowed. It will have a more adverse effect on County Kerry than perhaps any other county in the country.

These businesses are struggling already, considering they are after coming out of one of the worst recessions ever, but they kept their doors open and continued to put investment in. When I think of the hoteliers in County Kerry, whether it is small restaurants, bigger hotels or medium-sized hotels, many of them predominantly family-run - they are the rate payers. They are collecting the taxes that keep this Government ticking but they are forgotten about. They were sold down the river by this Government when it hiked up the VAT without giving them a second thought.

I also lend my support to the people who operate health food shops. The Taoiseach came out the other day with the nonsensical statement that he was going to improve his carbon footprint by stopping eating meat. For God's sake, a child in the cradle would not come out with such a statement, never mind anyone else. It was an embarrassment for the Department of Agriculture, Food and the Marine and the Tánaiste who I know would have more sense than to come out with such a silly statement. It really upset our farmers. This was an attack on rural Ireland and on every farmer who has cattle in sheds which they are trying to fatten and get ready for the factory or to sell in order to make a very small few pounds.

On the one hand we had the Taoiseach coming out with that statement and, at the same time, if we want to talk about healthier living and healthier foods, we have people who operate great health food shops all over the country. In the county I represent, we have many health food shops. We have the great Dan Horan of Horan's Health Stores who has a number of shops throughout Kerry and even in Limerick, and we have other private individuals who operate other shops with very hard-working staff. What have they seen happen? There has been a massive tax increase from 0% to 23%. How in the name of God could anybody justify this? It is ironic that at a time when people are encouraged to eat healthier foods and to lead healthier lifestyles, the Government comes along and taxes them out of existence. That was an awful and crazy initiative. I raised it here last December with the Taoiseach and he said he knew nothing about it at the time and that it would not happen at all. Now it is going to happen. How can the Minister of State tell these small shopkeepers, who are our rate collectors and who collect tax for the Government, that the Government will increase their tax from 0% to 23%? That is outrageous.

In many of our small villages we have seen the sad and absolutely heartbreaking decline of our rural pubs. The fabric of our society is under attack from the Minister of State and his colleagues who supported him when Fianna Fáil was sitting on its hands sound asleep allowing this to happen. As was pointed out here already today, 11 of the Fianna Fáil Members voted for the draconian measures which have been such an attack on rural Ireland. We are telling these publicans that people are being stopped from going to the pubs. At the same time the Government is telling them it will take their tax from whatever they sell, if they sell anything and it will also continue to take their rates. It is 100% true to say that there should be a ban on collecting rates from public houses that are below a certain threshold of turnover because they cannot pay it. They cannot pay it because they are making no money.

I am in public houses on a continuous basis, which I am very glad to be able to do. I meet constituents in pubs and I started it many years ago along with my late father, Jackie Healy-Rae. It was such an enjoyment to go to public houses that were full and vibrant. They were the cornerstone of our communities. Many of those public houses where we used to pull out in front of when the lights were on, the doors were open and the fire was lit in the corner are now unfortunately closed thanks to this Government and other governments. The Government succeeded in shutting them down. The sad fact is that many more of them will shut down and many more of our small shops will shut down. What is this Government doing for them? Absolutely nothing, but it is nailing them to the cross every way that it can. That is what it did here a number of weeks ago when it introduced the road traffic legislation attacking our rural pubs. The Government is doing absolutely nothing to help them. They created employment, whether it was for themselves, for a neighbour or a family member and now they are shut or as good as shut.

I see it getting worse and worse and it was pathetic to hear a Member of this House today on our local radio station, Radio Kerry, trying to defend what he had done by sitting on his hands and allowing our publicans in Kerry to be attacked in such a way. It was actually sad to hear him going on the radio because the way I would describe it was that he was trying to defend the indefensible. If one is elected to represent one's people in one's county, one is elected to represent all of the people and the first people who must be helped are those who create employment. Whether they are the small shopkeepers, the small publicans, those in the post offices or those in hotels, they are the people who are collecting tax and who we want to keep in business. Unfortunately they are getting nothing from this Government.

I ask the Minister of State to take seriously the suggestion of holding off on certain publicans because of the fact that their turnover has decreased so much. I know that our local authority, Kerry County Council, is excellent and has always been very willing to listen to individual cases where businesses are struggling but, unfortunately, so many of them are struggling at present that it will find it hard to deal with the amount of them. This is so wrong at this critical time. The Government seems to have absolutely no regard whatsoever for them. The more time goes by, the more the point will have been proven.

Over Christmas time, it was shocking to see how little business was being conducted in rural pubs. Perhaps the Minister of State did not see it and maybe people in this city did not see it but I know that we certainly saw it in north Kerry, south Kerry, west Kerry and east Kerry. Every small village has been desperately affected and when the people are not going out socialising it has a knock-on effect. The taxi drivers do not have the business and the food outlets and fast food outlets do not have the business. It has a knock-on effect if people are not allowed to go out, socialise and enjoy themselves. Keeping people at home is detrimental to a local community. We can all remember when more people were out socialising at night and at the weekends in particular and it brought life and money to localities. We do not have that now thanks to this Government and its policies of higher taxes, crippling rules and regulations and continuously going after the same people. It is the easy touch.

I ask the Minister of State to explain how any young person today could seriously consider starting up a small business? Whether it would be buying, leasing or taking over a pub or buying, leasing or trying to take on a small shop, how could they do it? The first day they would put up a sign and start, the whole lot would be down on top of them. Revenue, the HSE, taxes and rates would be down on top of them and would go through them like a dose of salts until they would be left on the side of the road with nothing. There is no encouragement whatsoever. This Government has proven itself to be anti-rural beyond belief and anti-small business beyond belief but the only thing about it is that the people have a good memory and they will remember the Government for it.

7:50 pm

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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We will be supporting this Bill, which is generally welcome. It provides for incremental change rather than radical reform. There were some discussions in recent years about the desire to create a relationship between the turnover of a business and the commercial rates, but that is not really an aspect of this Bill. Whether that is achievable is another matter but it is certainly an issue. It means that some small businesses in villages and towns have a relatively small turnover but are quite vital to the vibrancy of the town or village and provide passive security and oversight and add to the pleasure of the village and town in terms of character. That certainly would have been welcome and there would be high value turnover in some of those locations but generally there is not.

I will come back to other aspects of the Bill shortly but we cannot examine rates in isolation. For example, if we look at the difference between the profile of income for local authorities in say 2009 and look at a chart for 2016, which is not terribly different from today, the general purposes grant would have made up one third of local government income. The two areas that have grown are, first, local property tax, but that is significantly less than the general purposes grant and the general purposes grant has been phased out. The other area that has grown fairly significantly in terms of the increased take is that of commercial rates. Many of those in the business sector were supportive of, for example, the introduction of a local property or a household tax on the basis that there was an expectation that it would be an addition to the general purposes grant and may have provided some relief in terms of commercial rates but, in fact, the general purposes grant has been phased out and we can see that this profile has meant there is an increase in commercial rates generally.

Several Deputies referred to the uneven collection rate. The National Oversight and Audit Commission does a profile of local authorities. There is a remarkable difference between Fingal County Council with a 96% collection rate and Donegal County Council with the lowest collection rate of 74%: a few years ago that rate was even lower. It is not a question of it being patchy in every local authority, it is patchy depending on which local authority it is. There must be some understanding of why that is the case. This Bill, to some extent, will deal with that.

I heard some of earlier debate on the revaluation of premises. It is only when one experiences it, that it strikes home. The change on paper is not dramatic and it is supposed to be neutral in terms of the overall take, but there are winners and losers. I question the rationale in that respect. If we were to create a zone where, for example, the nearer to the door of a premises one's outlet was the more expensive would be one's component of rates, and it would become less expensive as one went in through the premises, it strikes me that if one had a fairly small shop, that would put one at a decided disadvantage. There are issues in terms of examining the methodology used.

The length of time this process has taken from beginning to end is an issue. In some councils a revaluation will happen in advance of a first valuation happening because a ten-year timeline has been predetermined. It is right that there should be reasonably regular reviews. We will not end up with dramatic changes when that is done and there is a facility to question the valuation. There must be consistency.

It may well be that parts of a county are less viable than other parts of it. Making a provision in legislation to deal with that is fine but one will find some parts of individual towns are more viable than other parts. That is because of out-of-town shopping centres and the advantage of having free car parking in a shopping centre and the pressure resulting from, say, pay parking in a town or village. That makes it very unattractive when one compares it to the convenience of being able to park outside a centre and get everything in the one location. Aspects of that need to be considered in the valuation process.

When I reflect on Griffith's Valuation, he started it in 1847 and it was completed less than 20 years later.

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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It was massive.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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He valued not only business premises but every shed, house and business throughout the country. He set out on a horse and had it done in 20 years. When I reflect on the technology that is available now and the length of time it has taken to do this with satellite imagery in terms of mapping premises, it is extraordinary that it has taken the length it has. It works to the disadvantage of ratepayers who have the worry of a dramatic increase. In some cases in some sectors we have seen quite a dramatic increase.

One of two speakers spoke about the new profile of shopping in terms of shopping online and the fact that there has been a reduction in regular shopping. That change was remarked on during the Christmas rush, or lack of it, in the capital city. How do we capture that in terms of a fair trading environment, where one component has an overhead that others do not and yet at the same time we are trying to deal with that in an international context? It is an issue that one can sell items cheaper if one does not have the burden of rates, rent and other overheads.

To return to the local government funding aspect of the Bill, one would nearly need to do a PhD to get one's head around it. If we make something very complex, people's eyes will glaze over. The sustainability of the local property tax, if it is to continue, is greatly undermined by virtue of the fact that we have these arbitrary baselines that are based around a needs and resources model that was done around 2000 and that does not count people. There are places in west Dublin such as Ongar and Tyrrelstown that were not counted and have not been counted. They still pay local property tax and still require services. The baseline in Fingal is the lowest in the country. I used it deliberately as an example because it is not my constituency and I cannot be accused of being parochial on this one.

The way local government is funded and where transfers go is unfair. I wonder if one of the reasons the collection rate for commercial rates in Fingal County Council is the highest in the country is that it simply has to have this funding to run its services. I put that out there as a point of consideration.

There are aspects of the Bill which are very welcome, such as the provision allowing rates to be paid in instalments. Rates can be set aside in some scenarios, which vary considerably around the country. If a sporting facility does not have a bar, it is exempt from rates in some places because it is treated as a social asset for the community. Social enterprises with charitable status can get an exemption at the end of the year. The bill is raised but forgone at the end of the year. The position is not the same throughout the country, however, and there are variations in approach. A degree of consistency on that would be helpful.

I looked at the overall spend. Some parts of the country are at a disadvantage in that income from commercial rates is lower than in other areas. Commercial rates can vary considerably depending on the part of the country and the calculation used. It is not just based on floor space but also what the local authority demands in the rate that it strikes. Cities are in a different league because they often provide services to people living in a wider catchment area than the city. When one looks at the amount of money that local authorities have to spend, that shows something entirely different. One could be a sizable net contributor to local property tax, have a high rateable valuation and, at the same time, have less to spend than other areas that benefit from the equalisation fund and have a lower commercial rate. A big piece of work is needed in this area. We have been promised that work be done on the baselines for the local property tax and a new distribution model. It would be useful if the Minister of State could give us an idea of when we might see that because it is important.

Another issue is the small cohort of people who set up a business, which is an unauthorised development for which planning permission has not been granted. Such businesses are not captured in the system, are not valued and do not pay rates. This means the owners benefit from not having gone through the planning system. When such a business is eventually shut down or obtains planning permission, the local authority will have forgone rates that would have been paid otherwise. I have come across a very small number of these cases but they are irritating for those who must compete side by side with them. That issue should be considered. If a business has been valued, it has been acknowledged, and if it is not valued, it is competing unfairly with a neighbouring business which is not fair.

This Bill is welcome and there are some changes in it. It is incremental change but I hope that we get to the point where we will deal with a more fundamental reform. The valuation system has been in place since it was commenced in 1847 and it is time that we went for something more radical.

8:00 pm

Photo of Alan FarrellAlan Farrell (Dublin Fingal, Fine Gael)
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I am pleased to have the opportunity to contribute on this Bill. I could not agree more with Deputy Murphy's reference to non-conforming use. There are quite a number of non-conforming properties that have residential zoning but commercial use, but since they are over the 12 year limit, councils cannot pursue them. We should pursue that issue. I drafted a Bill on this subject a number of years ago to try to capture these cases because they are inherently unfair, as Deputy Murphy correctly pointed out.

We all understand that the collection of commercial rates is integral to funding our local authorities across the State in combination with the local property tax. When addressing commercial rates, we have to be cognisant of the responsibility to ensure that we do not put an unnecessary burden on or detract from the viability of small businesses that populate our country. This Bill provides important measures to ensure rates are paid to the local authority, for example, the provision which places an obligation on the owners of commercial property to ensure any unpaid rates are paid prior to the sale of the property. For the reasons that have been outlined by some previous contributors, that presents issues.

The next point is important in the context of this Bill and any future legislative changes in this area. Local authorities should have the discretion to pursue matters where it is appropriate and fair to do so. Businesses may inadvertently rent a property, as has happened on a number of occasions. It is very unfair that a property owner or the next tenant in a property is stuck with somebody else's bill. Some local authorities deal with this differently but from a legislative standpoint, we should provide uniformity across the board. I heard in the Minister of State's speech that some local authorities in Dublin and another city permit a reduction of up to 50% in such cases, whereas some local authorities are permitted to provide a 100% waiver for vacant properties. We need to address these issues. If we want to incentivise companies from overseas to locate in Ireland, we have to give everybody a level playing field so that other local authorities can compete with Dublin and rural areas can compete with urban areas or regional cities.

It is important that local authorities have the certainty the rates system provides and which this Bill will enhance with regard to the appropriate level of maintenance of existing amenities for the benefit of all, not only the business community, but also residents. The completion of such works would be significantly hindered without the collection of commercial rates. I note that the legislation provides local authorities with the means to introduce targeted rates alleviation schemes or waivers. The purpose of these waivers is to support the implementation of national or local policy objectives. I understand that is being done with policies such as development plans and national planning policy in mind. Perhaps consideration should be given to the use of similar waivers in various policy areas.

I wish to raise a matter I raised previously with the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy, and the Minister for Finance, Deputy Donohoe, concerning childcare providers. As Chairman of the Committee on Children and Youth Affairs, I can say that most childcare providers pay commercial rates on the facilities that they use and this can have a significant knock-on effect on childcare costs for parents. It may put pressure on pay levels for staff in certain instances. Too often in this House, we talk about the need to actively tackle the cost of childcare, which can be equivalent to a second mortgage payment for many families. We discuss empowering people to return to work, yet childcare costs can constitute a significant barrier to parents and guardians getting back into the workforce.

Perhaps in addressing the cost of childcare we should examine the possibility of making changes in respect of commercial rates for childcare operators. This should be done in order to examine in particular providers in Dublin and other urban areas where commercial rates can have a detrimental impact on the affordability of both operating costs and subsequent costs for families. Where childcare providers pay commercial rates on their facilities, it is inevitable that these costs are passed on to families in the amounts they are charged for the services they receive. This fact is not really deniable. Furthermore, the fact remains that the rate of pay received by many workers in the childcare sector remains very low. Given the overheads that service providers face, they may not have sufficient profits to increase the wages of many workers as a result of measures to cover such costs and to ensure that families are not priced out of their services. I appreciate that this issue rolls into the remit of the Department of Children and Youth Affairs in terms of subsidies and support payments, but it is a small thing that can be done. There are an awful lot of small childcare providers out there that are registered with their local childcare committees and that pay rates. A little like the exemption of approved housing bodies from the registration of a property with the Residential Tenancies Board, RTB, for instance, which I suggested on Second Stage of a Bill before the House last week, in certain instances one must look at State service providers or quasi-State service providers and give them a break because it would have a knock-on effect in the cost to families.

I understand that Fingal has been referred to on a number of occasions this evening as having the highest rates collection profile in the country. I welcome this as a former councillor in Fingal and indeed one of its local Deputies. However, Deputy Catherine Murphy touched on one of the reasons for this, that is, that Fingal has one of the lowest rate levels in the country. One could counter this by saying that because it is one of the newest, fastest-growing local authorities in the State, with all that fresh developable land on which commercial parks among other things have been delivered, all these businesses are relatively young and are therefore used to paying their rates and that they are different from businesses on high streets in provincial towns and so on. I do not necessarily accept this point, but it should be borne in mind that as part of the revaluation process being updated in this Bill, which I welcome, it is still the case that two adjoining counties could be revalued nine years apart, if I am not mistaken. This is a problem and was a problem when the revaluation occurred in 2006, I think, in Fingal. The property market crashed in 2008 and, clearly, people in Fingal felt a little aggrieved that their businesses were being revalued at the top of the market and only a few short years later businesses were shutting up shop all over the place. There are issues with the revaluation process, but when it comes to two counties that adjoin each other, if one is valued in 2019 and the other in 2025 and they are so far apart in the intervening period, the county that is revalued this year might have an unfair competitive advantage over its neighbouring county. I understand and fully respect the fact that it takes time to revalue a local authority, as Deputy Catherine Murphy highlighted in her contribution when she spoke about the man on horseback who took 20 years to value the State. The point, however, is that we are a little more enlightened now and have more technological solutions available to us. It is possible for us to resource this a little more in order to get something more out of it in the long term. I would welcome the Minister of State's observations on this either in his summation this evening or whenever the Bill should come back before us for its next stages.

It would be remiss of me not to use this opportunity to highlight some of the difficulties in making a valuation in terms of the commercial rates for local authorities, particularly in the case of Fingal. I will give the Minister of State the example that occurred recently when setting the discount on the LPT in Fingal in September of last year. A few months later, Fingal County Council presented its annual budget and found an additional €8 million, I think, which it probably did not need to pass on to the local property tax payers. I think this additional sum of money had been pre-booked for something but was not expended. The long and the short of it is that the local property tax variation rate of minus 10% could have been the full minus 15%, which would have made a big difference to local property tax payers in my county. However, the councillors made a decision, which was too early by two months in my view, and the financial position adopted by the local authority at its annual budget in December was different from that presented in October and local property tax payers across Fingal were thus caught out. In the context of this Bill and the commercial rates, the knock-on effect for the commercial ratepayers in Fingal was that Fingal County Council did not, to the best of my knowledge, adjust its commercial rate level, despite the fact that it had additional funding. I would like to see a little uniformity in this regard. I appreciate entirely that this is not applicable to this Bill, but the overall funding of local authorities is encapsulated by the Bill and the Department should therefore consider it in the long term.

Another issue I would like to touch on is shopping centres, specifically the grading at which rates are applied depending on the location of one's business in the shopping centre. I am not entirely sure that there is a waiver or a scheme for such matters in this jurisdiction. I am aware from inquiring with a colleague of mine in a local authority in Spain that this is done there, that the business at the front of the shopping centre pays a higher rate than the one at the back because the latter does not get the throughput or the footfall. I am not aware of the position here, so perhaps the Minister of State could enlighten me as to whether it is the case that this approach can be taken by Irish local authorities. If not, we need to make it available to local authorities to review commercial rates as they apply to shops at the back of shopping centres because, obviously, they do not get the same throughput.

Finally, I re-emphasise the importance of capturing non-conforming uses, if legally possible - I hit a legal roadblock myself when I was drafting this Bill a number of years ago - particularly when a residential property is operating as a commercial property. I have even seen retail operating out of properties that are houses according to planners but retail units to everyone else. They are not paying rates and they should be. We should look into that. I thank the Minister of State for presenting the Bill.

8:10 pm

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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I am sharing time with Deputy Ó Cuív.

I welcome the fact this Bill is before the Dáil. It is long overdue. I remember being at a public meeting in Granard, County Longford, in May or June 2016. A then Government Deputy who was at the meeting told the ratepayers in the room, who were just after experiencing the revaluation process with many of them seeing significant increases in their commercial rates, not to worry and promised that the new rates Bill would be enacted long before they would have to pay any of their revaluated rates.

Photo of Alan FarrellAlan Farrell (Dublin Fingal, Fine Gael)
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Who could that have been?

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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That certainly has not been the case. How long will the Minister of State take to enact this Bill now that we are on Second Stage? Will he give a commitment that he will engage in a real and meaningful manner with all Members of the House, listen to our concerns and, particularly on Committee Stage, look at the amendments that certainly our political party will submit in the hope of improving the Bill? Will he then give a commitment that the Bill will be enacted in the not-too-distant future? The Minister of State does not need me to tell him this as he is from an area that does not have the benefit of Dublin city, Cork city or Galway city and is not experiencing the same uptake or increase in commercial sales that Dublin has experienced in recent years, but there are many commercial outlets - I am speaking in particular about the retail sector - that quite simply cannot afford to pay the commercial rates currently levied on them.

This Bill alludes to the fact that if all commercial rates were to be paid annually, it would contribute approximately €1.3 billion to our local authorities, which is approximately one third of the funding for local authorities. Even still, €300 million in commercial rates remained unpaid and uncollected every year. There is a difference between unpaid and uncollected. There are a number of businesses that quite simply cannot afford to pay the exorbitant rates because they do not have the capacity or the turnover to do so. There needs to be greater help and supports for these businesses. Businesses that can afford to pay and have willingly taken the conscious decision not to pay need to be pursued proactively to ensure their rates are collected and to ensure fairness and equity across the board.

Commercial rates are ultimately a tax on business. Does the way it is now levelled make it a fair and equitable tax? One business can operate from a small premises, with high levels of turnover and profit, and pay small commercial rates. Another business that is heavy duty and chunky and needs a large footprint but does not have the same level of turnover and profit pays large commercial rates. There is an inequity there. We should try to alleviate that inequity through the process of this legislation. We need to look at the ability of businesses to pay and, as I said, there are businesses which simply choose not to pay, not because they cannot afford to but because they do not want to. Those businesses should be sought out and it should be ensured that they pay. There are other businesses which can present documentary proof that they simply cannot pay the commercial rates they are being charged, and we need to look at how to bring in an ability for them to pay costs.

One issue I found during my engagement with the retail sector in Mullingar over recent months was that the challenges those businesses used to face were from out of town shopping centres like those in Liffey Valley and Dundrum. The big challenge now comes from the competition they face online. Those online companies do not have the same costs base or overheads and can therefore sell their produce much more competitively at lower prices. Customers now go into shops and try on shoes and clothes, note the brand and size of the clothing, and go home and order the product online.

We have a small, family post office that goes back many generations in Mullingar. The postman told me that the number of parcels delivered this Christmas increased probably tenfold in the 12 months from the previous Christmas. We have to look at how to capture the online trade if we are serious about helping small retailers. How can we ensure that the people working on the high street, providing a premises and employment and trying to pay their commercial rates are at least competing with companies that are paying their taxes? That is not the case currently.

I support the point raised by the Minister of State's party colleague, Deputy Farrell, about childcare providers. Childcare providers are providing a service that the State should provide. They have filled a gap that was allowed develop or evolve over a number of years. I understand from my previous days as my party spokesperson for children that community childcare facilities are exempt from commercial rates whereas private childcare facilities are not. That may differ from county to county, and the fact that there is a difference in how commercial rates apply from county to county further signifies the urgent need to reform how these rates are charged. Many commercial childcare providers provide the same schemes as other childcare providers, such as the free preschool year that has been extended to 24 months, but they have an additional overhead of commercial rates. As Deputy Farrell said, that overhead is not being absorbed by the provider but is being passed on to the parents of the children who use the service and, ultimately, it is driving up the already exorbitant cost of childcare.

I welcome the fact that at long last this Bill is before the House. It does not go far enough in addressing the deficiencies and inequities that exist within the commercial rates structure. It does not go anywhere near addressing the issue of the online trade. I hope, in his wrap-up, the Minister of State will give a clear commitment that he will embrace the amendments which will be forthcoming on Committee Stage and that he will accelerate the passage of this Bill because, as I said, we have been waiting in excess of three years for it.

8:20 pm

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I will share time with Deputy Aindrias Moynihan.

This is a tidying-up Bill. I am not saying that a tidying-up Bill was not needed but this is not reform. There is a need for a full reform of the rates system.

With some reservations, I welcome a much better system of collection. We are looking to move from a system that was collecting something like 77% of the money to a system where all the money will be collected. Those who are in arrears are jumping from a situation whereby they owe arrears but were not paying the full money to a situation where they have to pay the full money plus arrears. For some businesses, if that is at too sharp a curve, it becomes impossible to sort out.

My view has always been that, if a person in business has financial problems and the State says it will lend that person more money, that does not solve the problem. The problem is that the person has not been able to service their debt to date and the Government is then asking them to service another debt. Similarly, in this case, if businesses are told that not only do they have to start paying 100% of what they owe every year but they also have to pay the arrears over, say, two or three years, they are suddenly expected to pay the rates and a lot more with it, depending on how big those accumulated arrears are. That can put an impossible burden on a business that might otherwise be viable. A potentially viable businesses might be able to pay the full rate from now on, because times are a bit better, but it may not be able to pay the accumulated arrears that might have been allowed to build up, maybe partly because they were low priority and were not the creditors who did the most shouting. We will have a problem there.

It was tough medicine when the Revenue got a lot stricter in the 1980s than it had been and there was a period of adjustment. There was a lot of criticism at the time, for example, when penalties and interests were waived, but it gave people the chance to catch up.

This is always a problem. The other thing is if 95% of the rate, which we will say is the LPT figure, was actually collected, there would be scope for local authorities to reduce rates for all those who had been paying up to date. I would not hold my breath. It is something we also have to look at.

One thing I noticed about rates is there are certain types of business that are always complaining about rates. It goes back to the valuation system. My understanding is that the size in square metres of a building is one of the big determining factors. It depends on what one is doing with the square metres. One could have a massive production of microchips in a very small space but if one is doing something extensive or occasional, it becomes a massive burden. This is where what I call extensive hospitality, which tends to be either accommodation or a pub that only does weekend trade for most of the year, which is very typical in rural areas, and has built a big function room that is used for the odd funeral or social-----

8:30 pm

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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Or a political clinic.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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The Minister of State's clinics must be a lot bigger than mine because I do not need a function room for my clinics.

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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That is where we get shoved.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I would find those rooms too cold. The people where I do the clinics always give me a nice little snug place. The Minister of State is dead right. He knows what I am talking about. I asked a question in Galway one day. I asked how much of the rates relate to hospitality in the county. Only 20% of the total income from the rates was from hospitality. That would be both accommodation and pubs and restaurants. At the time utilities were a huge percentage of the rate in the county. The bigger factories in around the edge of Galway were very substantial rate payers. I have never really had very productive factories that work 52 weeks a year and in some cases do three shifts a day come to me about the rates being a big issue. Even where I live, the local businesses with that kind of activity - nobody likes any payment - would put rates at the top of the agenda but hospitality keeps coming at me. It becomes much more accentuated in rural areas for the reason I have just outlined. There are very few rural pubs, unless they have a good restaurant and a very good location, that open seven days a week, 12 hours a day. If they are open they are serving two or three customers who are drinking a pint. Their function rooms, which might be two thirds of their space, are empty 90% of the time. It always seems to me that surely something can be done to say the present system is inequitable for certain target groups. We can amend the law and ask why we do not have a rates system that does not only take into account space but also usage.

Even worse are the areas that only have a tourist season from April to November. Do we have any idea or has any study been done on what percentage rates typically are of the turnover of different types of businesses in different types of area? We should get the scientific knowledge and then rewrite the criteria on which the evaluation of rates is based. I am not talking so much about the Bill. It has a big effect because one cannot pay what one does not have. We should see what can be done to make it more equitable and affordable because the last thing we need are empty buildings.

I agree with the idea that something is paid on vacant buildings because otherwise we are just encouraging total vacancy. It cannot pay to leave somewhere idle. On the other hand, it would be a brilliant idea if commercial premises that are converted into accommodation are immediately de-rated.

Photo of Aindrias MoynihanAindrias Moynihan (Cork North West, Fianna Fail)
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As my colleagues have outlined, Fianna Fáil is supporting the Bill but will also table amendments. We have been hearing for far too long the wonderful ideas about overhauling commercial rates. It is wonderful to see there are positive steps being taken, though they are very small. Many rate payers right across the country would prefer more dramatic or significant steps to be taken on it. It is a step in the right direction but we need to see many other improvements. One of the things rate payers often highlight to us is the effort to build up town centres again. Over the years, the shopping experience in town centres has changed from a market town experience to that of out-of-town shopping centres and, more recently, to online shopping. We saw it with An Post before Christmas and from speaking to local postmen we know the volume they are bringing through has increased dramatically. The taxation system needs to reflect more realistically what is happening on the ground and not an old system that was put in place many years ago based on a fictitious valuation which is multiplied locally by the council.

We also need to take a realistic approach to businesses' ability or inability to pay because there are businesses that are seriously challenged from time to time. If there was some way of having a softer approach to get businesses over the hump it would make a difference. All too often we have seen the council wanting to rush into court, at the expense of the rate payer, to get the sheriff's order to hang over the rate payer as a threat. There should be some other way of having to take into account the businesses' inability to pay if they can show there is an issue and they will be over it shortly. Very often seasonal businesses and hoteliers have raised it with me as have many other smaller businesses.

Le fada an lá tá sé cloiste againn go gcaithfí athbhreithniú a dhéanamh ar an tslí atá na rátaí á íoc agus go gcaithfí athchóiriú ceart a dhéanamh ar an dlí. Is iontach an rud é go bhfuil deis ann anois agus go bhfuil céimeanna chun tosaigh ann, cé gur céimeanna beaga iad. Mar sin, beidh Fianna Fáil ag tacú leis an mBille seo ach i ndáiríre, beimid ag tabhairt roinnt rudaí chun cinn chun feabhsúcháin a dhéanamh air, mar shample go háirithe leis an tslí a bhíonn an éifeacht ar lár na bailte. Tá sé feicthe againn le fada an slí gur theip ar a lán de na bailte. Bhí siad ar fad ag braith ar mhargaí nuair a bhíodh daoine ag teacht isteach ach tá rudaí athruithe le fada agus tá na siopaí móra amuigh ar an imeall agus le déanaí tá an t-ualach mór ag druidim ar an idirlíon. Tá sé le feiceáil leis na couriers agus An Post mar shampla agus fiú an slí a bhfuil seirbhís nua acu i gcomhar an Sathairn chun an t-ualach mór a thabhairt chun cinn.

Caithfear cur san áireamh chomh maith go bhfuil roinnt gnóthaí nach féidir leo an t-ualach a íoc ó am go ham. Ba chóir go mbeadh slí éigin chun é sin a chur san áireamh. Bíonn deacrachtaí ag comhlachtaí ar nós óstáin agus go leor eile. Bíonn brú orthu ag tréimhse áirithe den bhliain agus caithfear é sin a chur san áireamh. Caithfidh sé sin a bheith sa Bhille nó i gceann eile a bheidh ag teacht chun cinn.

Mar atá ráite, is céim chun tosaigh é. Tá i bhfad níos mó feabhsúcháin ag teastáil ach is céim chun tosaigh é seo agus beimid ag cur moltaí eile chun cinn chun é a fheabhsú.

8:40 pm

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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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.

8:50 pm

Photo of Eamon ScanlonEamon Scanlon (Sligo-Leitrim, Fianna Fail)
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I think the Minister wants to respond to the debate this evening so I will be brief. I am grateful for the opportunity to raise a number of issues. Many of them have been raised already but we cannot refer to them often enough in my view. I come from rural Ireland and represent rural towns. Quite a number of small businesses in rural towns have closed in recent years because of the recession.

Some of them that are open are struggling. The only things that are keeping some of them open are the name over the door and pride. Some of the people concerned would be better off if they closed their premises because they would not incur costs and expenses. I know of one business which two pensioners are subsidising to keep it open and which is being hit with a rates bill of €4,000 per annum that they cannot afford to pay. A problem has arisen in the past few years and they have been paying what they can afford to pay by way of agreement with the council. Only last week they received a bill for over €20,000. There is no reason for what is happening when it comes to rates.

It is mentioned in the Bill that businesses will have to pay revised rates. There has been a revision of rates countrywide, including in counties Sligo and Roscommon and south Donegal, and in most cases it has been upwards. People could not afford to pay them before they were revised. Now they are being asked to pay more. This will result in business closures and job losses. We hear regular announcements of new supermarkets opening up outside towns and the 25 or 30 jobs to be created, but there is never a mention of the 30 jobs that will be lost in or close to those towns. The businesses concerned are being given a blank cheque. The Minister for Rural and Community Development, Deputy Ring, has established a scheme to regenerate activity in rural towns. It is a good idea and needs to be done, but I hope it is not too late. We have facilitated a lot of out of town shopping, which is fine when it comes to buying large bulky goods, but it is a mistake to allow a food business to be located away from the centre of a town. We are fortunate in Sligo town that Sligo County Council, through its development plan, preserves the centre for food shopping, which helps other surrounding businesses to survive. The bulky items can be purchased two or three miles away in shopping centres. This is working for Sligo. Had the county council allowed what had happened in other towns to happen in Sligo the centre would be a ghost town. It has gone through a rough patch in the past few years, but it is being revived because of the businesses that were maintained in it.

The Bill mentions the imposition of a charge on vacant properties. I know of a number of vacant properties which, if it was possible to rent them at a reasonable sum, the owners would rent because it would generate an income for them, but there is nobody to rent them. That is the harsh reality. Some of the properties have been vacant for years. I have said previously in the House that there should be some help and support for their owners in rural towns, as the premises could be used for residential purposes. We hear a lot about the housing crisis in Dublin, Galway, Cork and Limerick, but it is beginning to affect rural towns because, unfortunately, nothing has been built for the last 18 years. The Government could provide a tax incentive to encourage the owners of premises to upgrade them. Many of them cannot afford to do so without a tax incentive, which would not cost the Government one cent. Offering a tax incentive on rent over a period of ten years would encourage people to upgrade their premises such that others could live in them. That would take pressure off other parts of a county.

On arrears, I do not know how anybody who could not afford to pay and had an arrangement with the local authority will be able to pay €8,000, €9,000 or €10,000 per annum as they just do not have it. That is the reality. I know that different councils do deals, but it is difficult to get that point across. I know of an individual who feels so responsible for the payment of this money. If he had it in the morning, he would write a cheque and pay it. It is affecting his health to the extent that he does not know what to do. I have made arrangements for him to meet an official in the council to try to sort out the problem. To be honest, he would be better off if he closed the premises, but he is proud and does not want to do so. It is a difficult situation, but we are trying to deal with it. The council is wasting its time in going after such a man . He was paying what had been agreed, which I thought at the time was sufficient to ensure he would be okay, but rates are increasing again, which is unfair. There should be a relationship between what a business or premises can earn and the rates payable. There are small businesses that are doing well and generating a lot of profit and businesses four or five times the size of that small business that are paying up to four times more in rates but not earning one tenth of what the small business can earn. There needs to be a relationship between the income of a property and what should be paid in rates. The current system is, or at least used to be, based on a percentage of annual rental income, but it has not worked either.

There was a reference in the debate to bars, pubs and lounges. There are small bars that are doing very well and large bars that have no customers, particularly in rural areas. In the past two months these businesses have been hit hard because of rules and regulations which we debated on another occasion. The Government will notice a big change in early March in the VAT returns for the first two months of te year. The reduction will be very serious. The businesses have also suffered profit-wise in those two months. I accept the need for change, but it must be realistic and achievable. We have to make it easier for people to pay rates. They must at least be able to earn an income to pay them.

9:00 pm

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I will try to respond to as many questions as I can. A lot of the questions raised and a lot of what Deputy Scanlon and others spoke about relate to the valuations legislation. On small vacant premises, section 8 provides that a premises, for example, a small shop, above which, or at the back of, the owners are living will not be subject to a minimum rate being paid, even if the premises is vacant. Tubbercurry in County Sligo and Callan in County Kilkenny are two of the towns mentioned by the Minister for Rural and Community Development, Deputy Ring. He is right that they are similar in the sense that they have suffered a lot and that there are vacancies. It is important that Government policy in one area does not contradict Government policy in another. It is easy to say but difficult to enforce it, particularly when it comes to the funding of local authorities because each authority is a law unto itself in its jurisdiction. The points made about vacancies in town centres were well made and I agree with them.

One of the main new provisions included in the legislation will allow councillors at municipal district level to operate the variation scheme. In response to the points made by Rural Independents, if councillors in west Cork were to decide that they wanted to target the rural pub for a reduced rate or councillors in south Sligo wanted to target the main street in Tubbercurry or Ballymote or other similar towns, in keeping with the intention of the legislation, they would be able to do so. This independent action has not been provided for previously.

Section 5 which was mentioned by Deputy Ó Broin is merely a restatement of the provision included in the 1978 legislation.

It is a mechanism to ensure that local authorities do not continually increase the rate that is struck annually and do not become too reliant on the commercial sector for their funding. It has been used in 1999, 2000, 2001 and 2002 to varying amounts. There is also the issue, which is a strange one but it is true, that unauthorised developments are not exempt from rates.

It is a matter for the Valuation Office which does the valuations. There is no automatic exemption because something does not have planning permission. A commercial development already has an unfair advantage if it does not have planning permission.

Deputy Cassells, Deputy Casey and most of the speakers supported the thrust of the Bill, which is essentially a contradiction in itself in that it is aiming to do an awful lot in an area in which we have not had substantial legislation for a long time. While I accept that some of the provisions may seem modest nature, the Bill allows for flexibility, whether it is through the waiver mechanism or the local variation and alleviation scheme, for which it provides, and this is something that we have never done before. I fully acknowledge that the centre of towns and villages throughout the country have been greatly affected, even though it varies, and even then within counties. Some towns are doing better than others for whatever reason. There is also the substantial effect of the online shopping sector. I do not believe that the rates legislation will be able to solve that particular conundrum.

I am certainly open to the request of numerous speakers to have a broader discussion on the valuation element, the actual rates, and the future policy direction of rates legislation. Several Deputies spoke about having a vision for our market towns, although this is not solely confined to market towns and includes some of the larger urban centres.

Deputy Jan O'Sullivan mentioned that for commercial reasons some premises have been kept vacant in towns throughout the country, and in some instances in some very substantial towns. The Deputy named her own town and I could name a couple of others where similar situations have happened. That is one matter that the removal of the 100% rebate would be able to target specifically throughout the country.

Deputy Aylward raised the issue of local authorities pursuing rates bills while appeals have not yet been decided by the Valuation Office. I have not been able to get an answer yet but I will endeavour to get one because that is a very fair question to raise where serious letters are arriving from local authorities while appeals still have not been concluded by the Valuation Office.

Most of the speakers expressed support. There is a balance here - Deputy O'Sullivan mentioned this in her contribution - between ensuring that local authorities can be funded while having an appropriate modern system of commercial rates. The Deputy raised the concerns of forecourt operators not being able to take class actions. This is effectively a competition law matter, and I received those emails as well. When it comes to businesses, competition law is very strict as to the appeals that can be heard. I can understand some of the frustrations in this regard.

It is not the case that there is a uniform approach throughout the country whereby valuation is based solely on the size of the premises. It is not. It is based upon a number of factors, although size is a crucial one.

I emphasise that the alleviation scheme mechanism has the potential to allow councillors to have a say in the example given by Deputy Ó Cuív of a pub that built a function room in the 1970s or 1980s that is empty nearly all of the time now except for funerals and political clinics. If local authority councillors wish to target such premises with alleviation measures, they are free to do so.

Several Deputies spoke of trying to ensure an equitable mechanism is provided for the repayment of rates that are due, along with the payment of rates that have just fallen to be paid. Central to this Bill, along with the abolition of the two moieties, is giving the presumption of help to the business owner who wants to engage with the local authority.

I completely disagree with Deputy Cassells's suggestion - I do not believe he was necessarily serious about it - that we should take the collection of rates from local authorities and give it to the Revenue Commissioners. The Revenue Commissioners are by definition bound by the rules and laws under which they operate. Local authorities are best placed to use some sort of discretion, and to my knowledge they have that facility. Deputy Scanlon mentioned bringing people in to discuss arrears and difficulties that businesses find themselves in, something I have done too.

Deputy Pringle made a comment that is in the realm of fake news. He spoke about multinational companies being exempt from rates altogether. That does not exist. There is no provision for multinational companies being exempt from rates altogether.

I agree with most of what Deputies Michael Collins and Michael Healy-Rae said, even though a lot of what they said was about the Minister, Deputy Ross, and not about this legislation. They should be supporting this Bill, based on the arguments they made tonight, because it allows for alleviation measures for those villages that they spoke about in south Kerry and west Cork.

Deputy Troy raised the issue of commitment and asked if I would give a commitment that this Bill will be completed as soon as possible. I absolutely do give that commitment. There is a whole amount of legislation relating to Brexit, but it is my intention that this Bill will be finalised at the earliest opportunity. The Business Committee of the House will have a say on that, but we intend to have it completed as soon as possible.

Question put and agreed to.