Jim Daly (Cork South West, Fine Gael)
Link to this: Individually | In context

Question 267: To ask the Minister for Public Expenditure and Reform if he will consider introducing new legislation to revise the method of calculation of commercial rates on properties by possibly rating them in relation to their turnover as opposed to their square footage; and if he will make a statement on the matter. [27412/11]

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Valuation Act 2001 provides for the valuation of all commercial and industrial property and the Commissioner of Valuation is independent in the performance of his functions under the Act and the making of valuations for rating is his sole prerogative.

The basis of rateable valuation for all property is net annual value, i.e. the rental value of the property and is set out in Part II of the Act. Various methodologies may be used in estimating the net annual value (NAV)/rental value of a property. The most common methodology used is direct comparison with other similar properties but in some instances the receipts & expenditure method of valuation, where turnover is relevant, may be employed.

Changing the basis of assessment from net annual value/rental value to turnover as such would most likely change individual ratepayer liabilities and would change rates from being a local commercial property charge to a local business tax based on turnover.

The levying of rates on commercial property by reference to turnover rather than valuation would be a significant change and a departure from the long-standing practice of levying rates by reference to property values. There are already taxes in place which are levied on turnover, i.e. VAT and income/corporation taxes, and the adoption of such a system for rating purposes would not be suitable because turnover can vary significantly within and between the various business sectors, which would lead to an unstable and volatile valuation base.

I should emphasise that while the list of rateable valuations produced and maintained by the Valuation Office is the basis on which rates are levied, the amount of rates to be collected is a matter for each local authority to decide.

The legislation provides for a revaluation of all commercial and industrial property in the State. The revaluation programme began in November, 2005 in the South Dublin County Council area and has since been rolled out to the areas covered by Fingal and Dún Laoghaire-Rathdown County Council. The process is now being rolled out in Dublin City. The purpose of revaluation is to bring more equity, fairness and transparency in the local authority rating system. Ideally, occupiers of properties of similar value in the same rating authority area should have a similar rates liability. Following a revaluation, there will be a much closer relationship between rental value and commercial rates liability.

My Department is considering proposals to amend the Valuation Act to modernise and streamline the valuation process in the interests of both the ratepayers and the local authorities.