Kate O'Connell (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am fully aware as a ratepayer and business owner that revaluation has been happening over a number of years. In many cases, it has added fairness to existing rates but it has come to my attention recently, and the case is not based on my constituency, that the new way of evaluating rates for petrol stations and service stations, which is based on their turnover rather than the previous method, has caused these businesses to receive astronomical rates bills. In some cases, they are 500% of what they were paying originally. A particular case is in Cahir, County Tipperary. The rates bill for a business has increased from €20,433 to €97,300 and the business has not grown substantially in the intervening period.

When I looked into this I saw that turnover was being used as a variable in the equation. As a business person, I questioned how anyone could have let it be part of the equation because, as we say, turnover is vanity and profit is sanity. Here we are with a metric being used that does not necessarily reflect the profit margins of a business.

Petrol stations deal with a high cost but low margin item that is required by people to get about in their daily lives. In rural areas, the petrol station is also often the local shop. I find it very concerning that a rates bill could increase fivefold. I understand there is an appeal process but it is a bit late if we are looking at a small business, particularly in rural Ireland, where there might be bigger stations with probably similar turnover but low profitability. No business could sustain an €80,000 increase. It would be looking at staff cuts.

6 o’clock

I question the wisdom of how this was decided and how it could not have been flagged in advance. We are now in a situation where I am looking at a rates bill for a particular business - it is in black and white in front of me - of nearly €100,000. This seems to be an anomaly. Maybe it was intended but it appears to be grossly unfair. It puts a huge strain on businesses that may assume this rate will continue as is and, therefore, there is no way their businesses will be sustainable. I would welcome the Minister of State's comments and perhaps any solutions he might have for these people.

Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
Link to this: Individually | In context | Oireachtas source

The Minister of State, Deputy Phelan, always has solutions. Is that not correct?

John Paul Phelan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Indeed. I thank the Ceann Comhairle.

Deputy O'Connell raises a very topical issue, if you will pardon the pun. The Commissioner of Valuation is independent and the setting of valuations is the responsibility of that officeholder. It is the same categorisation as the Revenue Commissioners with regard to independence from Government. The Valuation Office is currently engaged in a national revaluation programme under the provisions of the Valuation Acts 2001 to 2015. A revaluation of all rateable property within a rating authority area reflects changes in value due to economic factors such as business turnover, differential movements in property values or other external factors and changes in the local business environment.

Under the current phase of the revaluation programme, 32,000 proposed valuation certificates, PVCs, were issued on 15 March 2019 to ratepayers in the Cavan, Fingal, Louth, Meath, Monaghan, Tipperary, Wexford and Wicklow rating authority areas. The Valuation Office held 50 walk-in clinics across the eight local authority areas. On 29 March 2019, the Valuation Office issued a further 3,500 certificates mainly relating to licensed premises, hotels, service stations and nursing homes. In advance of that issue, the Valuation Office provided specimen PVC documents to various bodies, including the Irish Petrol Retailers Association and offered to provide briefing sessions to its members, which are now under way.

During a revaluation, such as is currently taking place, the Valuation Office analyses the relevant market rental transactions for all rateable properties, including service stations, in accordance with: the legislation; best practice internationally as set out in published practice guidance notes; well-established valuation principles; and case law arising from the independent valuation tribunal and the higher courts.

The Valuation Office is satisfied that the valuation approach adopted in relation to service stations is reflective of open market rents paid by service station operators for that class of property and is compatible with the statutory requirements of Part 5 of the Valuation Act.

The levying and collection of rates are matters for each individual local authority. The annual rate on valuation, ARV, is decided by the elected local authority members in the annual budget, which is a reserved function. Rates income makes an important contribution to local businesses and communities, and it meets, for example, the cost of roads, public lighting, development and public realms in villages, towns and cities across the State. I believe that almost €1.5 billion is collected annually in commercial rates.

Having up-to-date and consistent valuations, reflecting current market conditions, is critical to ensure that the levying of commercial rates is fair, equitable and consistent across all economic sectors and different parts of the country.

The process of revaluation has been ongoing since the early part of this century. I am not sure how it was arrived at, which was the specific question asked by Deputy O'Connell. It is hoped - and this is where the solutions come in as referred to by the Ceann Comhairle - to have a valuations Bill before the Oireachtas before the summer recess. This would deal with specific issues around the areas currently being revalued.

I am acutely aware of the importance of service stations, especially in rural villages where they may be the only commercial premises in some areas, as the Deputy has correctly pointed out. This Bill may provide us with an opportunity. The Valuation Office is given its instructions under the legislation, which we approve, but we have the responsibility from time to time of looking at that.

The Deputy referred to the service station sector, which is a very low-margin business, and to the significance each of those commercial business has in those towns and villages. I believe there is a strong argument for looking at that again. I hope we will be able to do that over the next few months.

Kate O'Connell (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am fully aware of what the Minister of State said in his response. I know the process and how rates valuations work. Anyone who pays rates knows all of what the Minister of State said in his response. A briefing session for the man in Cahir is not much good. It will not give him the €80,000 he needs to pay his rates bill. The Valuation Office says the valuation is "reflective". Of course, the office would say that. The office designed it. It is clear to me, and I would imagine it is clear to anybody who knows how to do an equation, that this is not fair and that it is unsustainable for these businesses.

I question how it actually got to this point. Nobody really likes to pay rates but we all pay them because, as businesses, we know why we pay the bill. We have been paying water rates for years. We pay for our streets to be cleaned, although some of us get better street cleaning than others. Businesses know the total take but when a business ends up with a fivefold rates increase, it is very concerning for that business. Small businesses throughout the country that provide essential services for people and products people need are trying to survive. One cannot drive to the local big town to fill a tank with diesel if one does not have diesel in the tank. I believe we are looking at an unfair valuation that has slipped through the net and it is now manifesting as a fivefold bill on people who are trying to keep a business afloat. Let us not forget that many of those businesses have just about kept their heads above water for the last ten years. They may just be about to get into the green from the red and this is the last thing they need.

In the revaluation some businesses got nominal or marginal increases, and these were deserved due to past calculation errors, for example. In this case, for these particular businesses, it seems like an anomaly. It is unfair. I acknowledge that the Valuation Office is independent of the Minister of State's Department but we have a job in here. I am blue in the face saying that we are Teachtaí Dála, we are the messengers of the people. I am here to give the Minister of State the message that this is not fair, it is not sustainable and it is a worry for businesses. I hope the Minister of State will address the issue and that we can address it in this House to a satisfactory ending, so that we do not have businesses throughout the State stressed out and worried about a bill they cannot afford to pay.

John Paul Phelan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As I said, I hope we will get to it during this Dáil session. It is the intention that we would do so. I fully accept the arguments that have been made. I would point out that the revaluation process has been going on for more than a decade and some people did not survive it. Our system needs to be updated, particularly in the sector we are discussing. There are also certain aspects of rates' legislation that run counter to other Government policy objectives, and in this context I am thinking of those rural towns and villages where people are sometimes encouraged to have large shops. I know of one elderly couple who run a large shop, and who have been advised that they should partition off half of the shop. This would effectively leave a chunk of the main street with a semi-idle premises. Yet, the local authority and the Minister for Rural and Community Development, Deputy Ring's Department-----

Kate O'Connell (Dublin Bay South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Like the set aside.

John Paul Phelan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Like set aside. There are a number of things that need to be looked at again. This is one of them.