Written answers

Tuesday, 16 May 2023

Department of Housing, Planning, and Local Government

Commercial Rates

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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399. To ask the Minister for Housing, Planning, and Local Government the Government’s plans for the abolition of rates, in view of the recommendation of the Commission of Taxation for the abolition of rates; if a review of commercial rates is being carried out; and if he will make a statement on the matter. [22541/23]

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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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 Tailte Éireann under the Valuation Acts 2001 to 2015.

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 and make the largest single contribution to the provision of essential local services.

The Report of the Commission on Taxation and Welfare: Foundations for the Future recommended that a Site Value Tax (SVT) applicable to all land that is not subject to the Local Property Tax (LPT) should be introduced, replacing the existing system of Commercial Rates, and that there should be differential treatment in the application of SVT to agricultural land.

The recommendations in the Report will serve to inform the Government’s deliberations on such matters, however, there are currently no plans to replace commercial rates with a site value tax.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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400. To ask the Minister for Housing, Planning, and Local Government his views on whether it is fair that commercial rates have to be paid to local authorities by businesses that are getting no services for them (details supplied); if he plans to examine the rateable valuation considering that the recent restructuring of rates has put a lot of pressure on small businesses; the steps he plans to take in relation to same; and if he will make a statement on the matter. [22549/23]

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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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 Tailte Éireann under the Valuation Acts 2001 to 2015.

While some property and land is exempt from rates (the full list of exempted properties is set out in Schedule 4 of the Valuation Acts 2001 to 2015), most commercial properties are subject to commercial rates. Rates are generally payable by the occupier of a commercial or industrial property.

The amount of rates liable on a property is determined by multiplying the valuation of the property set by the Valuation Office by the Annual Rate on Valuation (ARV) set by the local authority. The ARV is decided by the elected members of each local authority in their annual budget and its determination is a reserved function of a local authority. I have no role in this regard.

Commercial rates income makes a significant contribution to the funding of local government, providing between 14% and 47% of total funding for local services at individual local authority level, averaging 27% nationally. Rates income is a very important contribution to the cost of services provided by local authorities such as roads, footpaths, the public realm, litter management, public lighting, development control, parks and open spaces; all essential elements to create the environment in which businesses can prosper.

Tailte Éireann 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.

After a revaluation of a local authority area, the Minister 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 normal inflation and buoyancy to take account of new valuations. RLOs have been made for each of the 23 local authorities that have undergone a revaluation to date and will be made in the coming months in respect of the seven local authorities where revaluations are concluding this year.

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. In terms of revaluations to date, I understand that the trend is that approximately 60% of ratepayers have experienced a decrease.

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