Written answers

Tuesday, 9 June 2015

Department of Environment, Community and Local Government

Commercial Rates

Photo of Joe CareyJoe Carey (Clare, Fine Gael)
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1083. To ask the Minister for Environment, Community and Local Government his plans to reform the commercial rates system to ease the significant burden on small to medium sized business; and if he will make a statement on the matter. [22289/15]

Photo of Alan KellyAlan 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 for Valuation has sole responsibility for all valuation matters. The levying and collection of rates are matters for each individual local authority.

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. A large body of case law is well established and local authorities and ratepayers are, in the main, very familiar with, and generally accepting of, the operation and practice of the rating system. Rates are also a stable source of financing for local government which is not affected unduly by short-term changes in economic circumstances.

I am more than aware of the demands the economic downturn has placed on the commercial and business sector. My Department has, in recent years, requested local authorities to exercise restraint in setting, and where possible to reduce, Annual Rates on Valuation (ARVs) and they have responded positively in this regard. The national average ARV decreased each year from 2010 to 2014; 2015 is not directly comparable due to the local authority mergers and the necessity to harmonise rates across new local authority areas.

The Local Government Reform Act 2014 gave effect to the reorganisation of local governance structures, set out in the Action Plan for Effective Local Government – Putting People First.A key objective of the reform programme is to reduce the burden on ratepayers and indeed taxpayers generally, by reducing cost and maximising efficiency.

The new structures of local government, including the establishment of municipal districts, provide an opportunity to achieve a more coherent approach to rates and charges on a county-wide basis having regard to funding requirements and the need to support employment and business competitiveness. The Act provides for rates harmonisation, to cater for differences between ARVs of towns and counties, to be achieved over a ten year period.

The Act also provided for the removal of the liability that is placed on new occupiers of properties for up to two years of outstanding rates of the previous occupier. This is a strong indication of the Government’s commitment to removing any barrier to enterprise development and to support business start-ups and those existing businesses wishing to expand or relocate.

A relatively low level of analysis has been carried out in respect of the impact of rates on business costs but what has been completed 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 the research from Forfás, IBEC and local authorities all indicate that commercial rates are, on average, less than 5% of business costs.

I will continue to keep the approach to rates by local authorities under active review, and am determined that every avenue will be pursued to optimise efficiency and contain costs in the local government sector.

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