John Paul Phelan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I agree with Senator Murnane O'Connor, but Carlow County Council already has the freedom to do that. The situation varies from county to county on whether such a power is exercised by the members, through the management. All local authorities will work with ratepayers who are in distressed situations if the ratepayers engage with them to devise an appropriate payment plan. One of the things this legislation does is it gets rids of the old archaic system of two moieties and will allow a staged payment system over the course of a year, which for some businesses might mean they have good months and bad months and they will know when they are able to pay more rates perhaps than in other parts of the year. We are putting that on a statutory footing in this legislation. Equally, I reiterate that such discretion already exists and is used by some local authorities and should be used by more.

I will refer to some of my notes before I get sacked. Once a ratepayer engages with a local authority, the local authority can work with the ratepayer to facilitate an appropriate payment plan. The liability remains, however, and that cannot be defrayed. It would be inequitable to other ratepayers. I am thinking of two retailers on the same street; one whose valuation was more up to date and whose rate did not change and another who experienced an increase in rates due to an out-of-date valuation. It would not be equitable for one ratepayer to continue paying rates at a higher level while subsidising a lower rate payment by a neighbouring retailer. That situation could arise, in particular in light of the fact that, as Senator Gavan pointed out, there have not been revaluations for years but they may have occurred if somebody carried out substantial work to their premises. Therefore, one could have, in effect, two different systems operating on the same street. Furthermore, how would the provision apply to ratepayers whose valuation has reduced? Should they be expected to pay more than they legally owe if there was a multi-annual decrease?

It is worth noting at this point that global utility companies such as the ESB, Eir or Vodafone pay approximately 33% of overall commercial rates. The amendment, as proposed, would have the effect of allowing for a phased approach to an increase in the valuation of a global utility company, such as Vodafone, the ESB or Eir, as well as for the more traditional ratepayers who, proportionately, are a smaller group in many local authorities in terms of the amount of rates they collect. It is expected that utility companies would also be subjected to a phased reduction in the case of their valuations decreasing. The question is whether they would legally challenge it, which of course they would. For context, in 2015, the seven global utilities being revalued that year had their collective rates bill reduced by €24 million following a decrease in most of their valuations. It would be safe to assume that local authorities would have to defend costly legal actions in a scenario where they try to impose greater rates demand on a ratepayer than is merited by the actual valuation of their property or business.

The local authority has the flexibility to engage with individual ratepayers in such cases. In response to Senator Craughwell, the circular that will issue following enactment of this Bill, will ask local authorities to be cognisant of those ratepayers who have experienced significant increases in valuations. In recent years, the Minister has requested that local authorities exercise restraint in the determination of the ARV and, to give them their due, local authorities have done as requested. I have committed to looking at valuation issues and the impact of valuation in the autumn. As I said yesterday, that may require primary legislation on the valuation side rather than on the rates side that we are looking at today, and in particular the impact on businesses which had a significant increase in valuation and hence in their rates bill. The likelihood of such increases occurring will lessen as the revaluation programme completes, and the revaluation cycle becomes regular. As Senator Gavan pointed out, it has been far from regular in the past 30 to 40 years and that is what has led to the significant jumps in valuation because we have not had an ongoing revaluation process. I referred yesterday to progress with clearing the backlog of revisions in terms of the resources that are available to the Valuation Commissioner.