Malcolm Noonan (Carlow-Kilkenny, Green Party) | Oireachtas source

Like the Senator, I strongly believe in strong and well-funded local government, having spent 16 years of my public life as a member of a local authority. The issue he has raised is important. As he will be aware, local authorities are legally obliged to levy rates on any property used for commercial purposes. Indeed, commercial rates are the single greatest source of income for local authorities, with that income supporting the provision of essential local services. When preparing their budgets for 2021, local authorities budgeted collection of €1.67 billion in rates from approximately 150,000 commercial and industrial properties. This equates to 29% of the overall projected revenue for 2021, although the figure varies by local authority. The continuing impact of Covid-19 for all society and business may have a significant effect on these estimates.

In 2020, to support businesses and ratepayers and in recognition of the impacts of Covid-19, the Government funded the cost of a commercial rates waiver for nine months. This unprecedented measure offered support to businesses, as well as financial certainty to local authorities, and cost €730 million. The Government is currently funding a more targeted rates waiver, with modified criteria, for the first six months of 2021, with an expected cost of €320 million. It will equate to a total cost to the Exchequer of more than €1 billion.

The Local Government Rates and other Matters Act 2019, which modernises rates legislation and practice, was passed by the Oireachtas and enacted in July 2019. Plans to commence the legislation and introduce necessary regulations have been delayed due to the impact of the Covid crisis and work on the Government-funded rates waivers. The commencement of the provisions of the 2019 Act is an important element of our commitment in the programme for Government to examining ways to further streamline the commercial rates system post Covid-19.

A property-based charge such as commercial rates has a distinct advantage over sales-based taxes or any tax based on profits or incomes, as it is generally found to be easy to collect and difficult to evade. Rates are levied on any property used for commercial purposes, making no distinction as to whether that commercial activity is online. In that context, there is no intention to alter significantly the commercial rates model.

The trend of customer transition from bricks and mortar shops to online retail is acknowledged and is a matter for taxation policy consideration by my colleagues in the Department of Finance. I support the need to protect footfall on our streets and in towns and city centres. I acknowledge it is vital to ensure that rates continue to contribute to a stable basis for funding local government and not least to the cost of services provided by local authorities such as public lighting, development control, parks and open spaces, all essential elements to create the environment in which communities can prosper.

I take on board the argument made by the Senator. The issue he raised relating to booksellers is important. My colleague, the Minister of State with responsibility for public procurement, is in the Chamber. Being able to provide contracts to local booksellers and suppliers for libraries and so on is an important part of it. Local authorities will have to give consideration to other mechanisms for raising revenue, such as setting up energy supply companies or getting involved in public banking, something we have been raising for years. Perhaps they could even levy out-of-town car parking to bring funding back into town centres. There is no doubt we have a significant challenge into the future but we can collectively address it. The Town Centres First policy will deliver significant impacts by providing a suite of options to support town centres and people returning to them. These are important elements to be added to the revenue and income streams for local government.