Willie Penrose (Longford-Westmeath, Labour)
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194. To ask the Tánaiste and Minister for Justice and Equality if his attention has been drawn to the fact that private early years services providing full day ECCE, free preschool, are exempt from rates while those providing full day care services or afterschool services are obliged to pay commercial rates; if he has had contact with the Department of Children and Youth Affairs with a view to standardising the non-payment of rates by all early years services providers; if an equalisation grant to offset the cost of commercial rates can be provided to providers for which it is not possible to remove the rates obligation; and if he will make a statement on the matter. [54012/17]

Charles Flanagan (Laois, Fine Gael)
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I should point out that the Commissioner of Valuation is independent in the exercise of his duties under the Valuation Act 2001, as amended, and the making of valuations for rating purposes is his sole responsibility. I, as Minister for Justice and Equality, have no function in decisions in this regard.

The Valuation Act, 2001 as amended by the Valuation (Amendment) Act 2015 provides that all buildings used or developed for any purpose, including constructions affixed thereto, are rateable unless expressly exempted under Schedule 4 of the Act. Such exempt buildings would principally include those used for public worship, education and health care provided on a not-for-profit basis, and charitable purposes. In general, the Act maintains the long-standing position that all commercial properties - including all private childcare facilities such as play schools, pre-schools, crèches and Montessori schools - are liable for rates.

Inconsistency in the approach to the exemption from rates for childcare and education facilities and calls to exempt all such providers were among the issues raised at a number of stages during the passage of the Valuation (Amendment) Act 2015. As a result, the Government approved an amendment to the Bill, to insert into Schedule 4 of the Valuation Act 2001, an exemption from rates for properties occupied by parties that provide early childhood care and education on a not-for-profit basis. This extension of the childcare and education exemption removed an anomaly that previously existed where those that provided childcare and education on a charitable basis were exempt but those that did so on a not-for-profit basis were not.

The decision taken by Government in the Valuation (Amendment) Act 2015 to extend the exemption from rates for early childcare and education was taken having considered the views of stakeholders in the sector. As outlined in Oireachtas debates during the passage of the legislation, key valuation principles have to be respected to retain the integrity and equity of a system that is a significant source of funding for Local Authorities. One of those principles is that properties of occupiers that operate with the intention of making a profit are rateable. There is a variety of other more appropriate means through which Government can and does support the provision of such services. Making exception to core, long-standing valuation principles can have a far reaching negative impact on the rates system and consequently a far reaching impact on Local Government funding.

In addition to the exemption of those that provide childcare and early education on a not-for-profit basis, paragraph 10 of Schedule 4 of the Valuation Acts 2001 to 2015 also exempts from rates childcare facilities that only provide the Early Childhood Care and Education Scheme.

The Acts are quite specific about the range of exemptions that can be allowed by the Commissioner, who has no discretionary latitude to grant exemptions not covered by Schedule 4. As a matter of course, the Valuation Office examines all claimant cases on their individual merits by reference to the relevant statutory provisions governing the operation of the Valuation Acts as they relate to pre-school childcare facilities and all other categories of properties.

Regarding the payment of rates by individual ratepayers, the Deputy will be aware that under Irish law there is a distinct separation of function between the valuation of rateable property and the setting and collection of commercial rates. The amount of rates payable by a ratepayer in any calendar year is a product of the valuation set by the Valuation Office multiplied by the Annual Rate on Valuation (ARV) decided annually by the elected members of the local authority. The latter is a reserved function of the elected members and the Commissioner of Valuation has no function in this regard.

The Department of Children and Youth Affairs (DCYA) was consulted in the deliberations surrounding the extension of the exemption from rates for early childcare and education. Private childcare facilities which are operated for profit form part of the rateable valuation base on a nationwide basis. While I understand that this issue has been the subject of discussions earlier this year between the Department of Children and Youth Affairs and my own Department, there are currently no plans to provide for special treatment of these for profit facilities by their exemption from rateability under the Valuation Acts.

Finally, I should point out that there are a number of avenues of redress for an occupier of rateable property who is dissatisfied with a determination of valuation made under the provisions of the Valuation Acts, 2001-2015. Firstly, before a determination is made, there is a right to make representations to the Valuation Office in relation to a proposed valuation. Later in the process, if the occupier is still dissatisfied with the determination, there is a right of appeal to the Valuation Tribunal which is an independent body set up for the purpose of hearing appeals against determinations of the Valuation Office. There is a right of appeal to the Higher Courts on a point of law.

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, pursuant to the Valuation Acts 2001 to 2015. The levying and collection of rates are matters for each individual local authority.

Commercial rates form an important element of the funding of all local authorities. The principle of local authorities levying rates based on an independent valuation is well established, and I understand that the Department of Housing, Planning and Local Government has indicated that there are no plans to change this.