Written answers

Thursday, 5 March 2020

Department of Housing, Planning, and Local Government

Commercial Rates Impact

Photo of Niamh SmythNiamh Smyth (Cavan-Monaghan, Fianna Fail)
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1184. To ask the Minister for Housing, Planning, and Local Government if his Department has been in discussions with the Department of Finance on the rising cost of business rates in rural Ireland; and if he will make a statement on the matter. [2890/20]

Photo of John Paul PhelanJohn Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I understand the vital role local businesses play in supporting local authorities to deliver services to their communities. Commercial rates, at approximately €1.5bn per annum, make up roughly a third of local government current (revenue) income. 

Local authorities are required by law to levy rates on any property used for commercial purposes, in accordance with the details, entered in the valuation lists. The lists are prepared by the independent Commissioner of Valuation under the Valuation Acts 2001 to 2015. Recognising the critical importance of commercial rates, I prioritised the Local Government Rates and Other Matters Act 2019 for enactment last year. The Act modernises the rates system for both ratepayers and local authorities.  

The levying and collection of rates are matters for each individual local authority and the Minister for Finance has no direct function in the matter.  The annual rate on valuation (ARV) is decided by the elected members of each local authority in the annual budget and its determination is a reserved function. The ARV is then applied to each property’s valuation to obtain the amount payable in rates. 

The Commissioner for Valuation is currently conducting a national programme of revaluation to provide consistent, up-to-date valuations so that rates are equitably distributed. Revaluation results in a redistribution of the commercial rates liability between ratepayers. While an individual occupier’s rates liability may increase or decrease, the revaluation will not increase the overall commercial rates income of the local authority. It is not the purpose of a revaluation to increase the commercial rates collected. Interestingly, in terms of revaluations to date, I understand that the trend is that approximately 60% of ratepayers have experienced a decrease.  

After a revaluation of a local authority area, the Minister, with the consent of the Minister for Public Expenditure and Reform, is required to make a Rates Limitation Order (RLO) to ensure that the overall rates collected in that area for the following year, does not increase beyond set parameters, for example, taking account of normal inflation. RLOs have been made for each of the 23 local authorities that have undergone a revaluation to date and will be made in respect of the remaining local authorities where revaluations are to be concluded in the coming years. 

At all stages of the process, ratepayers are consulted and informed and can bring relevant information to bear on the valuation. Ultimately ratepayers have a right of appeal to the Valuation Tribunal and beyond that to the Courts on a point of law. 

Local authorities work closely with ratepayers experiencing difficulties with the payment of commercial rates.  In this regard, local authorities may facilitate the payment of commercial rates by instalments, and work with businesses to put in place flexible payment options. The Local Government Rates and Other Matters Act 2019 further facilitates such flexible approaches, on the basis that ratepayers engage with the local authority concerned. 

Importantly, Section 15 the new Act also provides for a rates waiver schemes, to be decided by local authority members in order to promote national and/or local policy objectives, including for example, local area plans under the Planning and Development Act 2000 and local economic and community plans under the Local Government Act 2001. 

Prior to local authorities deciding their 2020 budgets, my Department wrote to all local authorities highlighting the new waiver provisions, contained in the 2019 Act, indicating that the work in respect of commencing Section 15 is underway and to make a provision in their budgets if they planned to implement a waiver scheme in 2020.   

Last October I, along with the Minister for Business, Enterprise and Innovation, met with members of the Retail Consultation Forum and it was agreed that a separate meeting on Commercial Rates and Valuation could be beneficial in sharing experiences and working together to improve the efficiency and effectiveness of the Commercial Rates and Valuation regimes.  

My Department proposes to convene such a meeting between representatives of the Retail Consultation Forum, the Valuation office and local authorities to explore a number of thematic issues such as sustainable development, through the regeneration and rejuvenation of Ireland’s cities, towns and villages; the experience of retail ratepayers in terms of valuation and rates at a systemic level; and the implementation of the Rates and Other Matters Act 2019.

As a first step, my Department has sought initial input from the members of the Retail Consultation Forum to the development of an agenda for this engagement.


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