Niall Collins (Limerick, Fianna Fail)
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Question 259: To ask the Minister for Public Expenditure and Reform the action he will take on the subsequent occupier clause condition in the current valuation process; and if he intends to review his position on inserting an economic conditions clause into the valuation appeals process. [37660/11]

Brendan Howlin (Wexford, Labour)
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Local authorities are under a statutory obligation to levy rates on any property used for commercial purposes in accordance with the details entered in the valuation lists prepared by the independent Commissioner of Valuation under the Valuation Act 2001. The levying and collection of rates are matters for each individual local authority.

The person liable for payment of rates is the person in occupation of a rateable property on the date of the making of the rate by the relevant local authority. The owner rather than the occupier may be liable for commercial rates if the property in question is unoccupied on the date of the making of the rate. Should a person's occupancy commence after the date of the making of the rate then that person is not primarily liable for rates for that year. However, as a subsequent occupier, that person can be held liable for up to two years arrears of rates if they cannot be recovered from the person with whom the primary liability lies.

The Valuation Act sets out the procedures and basis for assessing the valuation of properties for rates purposes. The Act does not deal with liability for rates which is covered in rating and local government law.

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, which came into force on 2nd May, 2002, 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 reference 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 Commissioner of Valuation is conducting a programme of revaluation of all commercial and industrial properties throughout the State on a county by county basis. The purpose of the revaluation process is to provide for more consistent and up-to-date valuations for rating purposes and to assist in providing a more equitable distribution of valuations across those liable to pay rates. 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.

The Commissioner, in consultation with my Department, has been reviewing various options for streamlining the valuation process and speeding up the national revaluation programme. In this regard, the Government recently approved the drafting of a Valuation Bill to amend the Valuation 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 their Annual Rate on Valuation (ARV) in the context of the adoptions of their 2012 budgets. Local authorities have responded positively to similar requests in recent years. 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.