James Bannon (Longford-Westmeath, Fine Gael)
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527. To ask the Minister for Environment, Community and Local Government the progress achieved with local authorities in reducing the rates burden on businesses; and if he will make a statement on the matter. [3600/15]

Alan Kelly (Tipperary North, 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 Commissioner o f Valuation has sole responsibility for all valuation matters. The Annual Rate on Valuation (ARV), which is applied to the valuation of each property determined by the Valuation Office to obtain the amount payable in rates, is decided by the elected members of each local authority in the annual budget and its determination is a reserved function.

Local authorities are very aware of the demands placed on the business and commercial sector at this time, as well as the competitiveness issues this gives rise to. Local authorities have a leading role in creating a pro-enterprise supportive environment to generate new jobs and sustain existing ones. They are committed to local economic development, and are best placed to meet many of the needs of businesses in terms of infrastructure, local promotion and other key enabling measures.

In accordance with the Government’s Action Plan for Jobs,my Department requested local authorities to exercise restraint in setting ARVs in recent years and they have responded positively in this regard. The average ARV adopted by local authorities nationally has decreased each year since 2010. The new structures of local government, including the establishment of municipal districts, have provided an opportunity to achieve a more coherent approach to rates and charges on a county-wide basis. In 2015 , local authorities have begun the process of harmonisation to cater for differences between ARVs of former towns and of counties. In the harmonisation process ratepayers will not pay any more in 2015 than they did in 2014. Any increase or decrease in rates liability due to harmonisation will be phased in after 2015 over a period of up to 10 years. I am also pleased to note that those local authorities which are not subject to the requirement to harmonise, due to already having one ARV for the whole of their administrative area, have either reduced the ARV for 2015 or kept it the same as 2014.

It is worth noting that analysis of the impact of rates on business costs is limited. What analysis is available concludes that commercial rates represent a small portion of overall business overheads compared to energy, rents, payroll and other inputs. The figures vary from sector to sector but research from Forfás, IBEC and local authorities all indicate that commercial rates are, on average, less than 5% of business costs.

I accept that the current rates burden , while not excessive overall , may be unfairly distributed in some cases. The revaluation process currently underway by the Valuation Office is re-balancing rates liabilities to ensure that the rates burden is more equitable and in line with changes in valuations across different classes of properties within counties.