Michael Healy-Rae (Kerry South, Independent)
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Question 192: To ask the Minister for Public Expenditure and Reform his views on a matter (details supplied) regarding the Valuation Act 2001; and if he will make a statement on the matter. [37336/11]

Brendan Howlin (Wexford, Labour)
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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. Under the 2001 Act, the basis of valuation for all commercial property is net annual value, i.e. the rental value of the property. To ensure equity and uniformity, valuation revisions which are set for modified or new properties are determined by references to the values of comparable properties on the same valuation list.

Under section 28 (4) of the Act, a Revision Officer of the Commissioner may carry out a revision of valuation in relation to a particular property only if a material change of circumstances has occurred such as a new building, a change in value due to structural alterations of an existing building, total or partial demolition of a building or a sub-division or amalgamation of relevant property. The definition does not allow for a revision of valuation where the change in value is due to economic factors, differential movements in property values or other external factors such as roads or other infrastructural development in the vicinity of a property.

Revaluation is the mechanism whereby economic changes that take place in the property market are reflected in the valuation lists and in individual ratepayers' rates liabilities. The purpose of revaluation is to bring more equity, fairness and transparency to the local authority rating system. Ideally, occupiers of properties of similar value in the same rating area should have a similar rates liability and, following revaluation, there will be a much closer relationship between rental value and commercial rates liability and this relationship will thereafter be maintained by means of recurring revaluations provided for in the Act.

It is important to acknowledge that commercial rates, as a local tax, and the rating system generally, are deeply embedded in the local government system. Rates income is a very important contribution to the cost of services provided by local authorities such as roads, public lighting, development control, parks and open spaces. All rates collected within a local authority area are spent exclusively in delivering the public services which are required locally to create the environment in which businesses can prosper. Locally elected members adopt the annual rate on valuation they consider necessary in order to provide the required services. Rates are a stable source of financing for local government which is not affected unduly by short-term changes in economic circumstances. A system having regard to economic factors on an ongoing basis would create uncertainty by providing for continuous change to the valuation base. Such a system would not provide a stable basis for funding local government and would require significant additional resources to operate.

Local authorities have been asked by the Minister for the Environment, Community and Local Government to exercise restraint in setting the Annual Rate on Valuation (ARV) in this and previous years and they have responded positively in this regard. The Government recognises that these are difficult economic times for many businesses and will continue to keep all matters relating to rates under regular consideration and is determined that every avenue will be pursued to optimise efficiency, and contain and reduce costs in the local government sector.

My Department is reviewing various provisions of the Valuation Act 2001, including the appeal procedures, with a view to modernising and streamlining the valuation process in the interests of both the ratepayers and the local authorities. In conjunction with the Valuation Office and the Attorney General, preliminary Heads of Bill have been drafted which I hope to bring to Government shortly for approval.