: I move: "That the Bill be now read a Second Time."
A major undertaking of the Government's pre-election manifesto was the commitment that, from January 1978, rates would be abolished on domestic property, the domestic part of mixed property, secondary schools, bona fide community halls and on farm buildings which were not previously exempted from rates. The Bill is designed to give statutory effect to this undertaking. Its other purposes are to validate the partial relief of domestic rates which obtained in 1977, and to provide for a number of consequential and miscellaneous amendments of the law relating to rating and local government.
Houses were not generally assessed for rating until 1826. Since then, many adjustments have affected the rateability of domestic property. For instance, as far back as 1849 liability for rates on certain small dwellings in Dublin City was transferred from occupier to owner. As recently as 1966, the Housing Act continued the phased nine-year remission of rates on new grant-aided houses and the seven-year deferment of valuation increases on house improvements aided by reconstruction grants. Schemes for the waiver of rates and for the payment of domestic rates by instalments were authorised by the Local Government (Rates) Act, 1970.
The need to modify the rating system in its impact on domestic property has thus been frequently admitted in the past. The several investigations and studies of the rating system undertaken in recent years have been prompted more than anything else by a basic dissatisfaction with the way in which rates bore on householders. No fundamental solution to the problem emerged until our proposal to give total relief of domestic rates. Despite the last Government's action, for example, between 1973 and 1977 in phasing health and housing charges from the rates, the average rate in the pound still rose in this period from £6.70 to £9.00. Our initiative has been bolder and more clearcut. In this Bill we are removing once and for all the burden of rates from over 850,000 householders and other persons benefiting from the new reliefs.
A rather complex Bill has been required to give legislative expression to the derating proposals of the manifesto. Deputies will understand that the rating code has a long history and is spread through a considerable number of enactments. I will do my best, of course, on Committee Stage to try to clarify any points of detail which may be raised.
Although the Bill is complex and technical the structure of the new rating reliefs for which it provides is simple enough. Under section 3 of the Bill rating authorities will each year make an allowance to the rated occupiers of the newly relieved properties. Section 4 provides in the same way for the more limited relief of 25 per cent of domestic rates which was given in 1977. From 1978 onwards the allowance under section 3 will be equal to the full amount of the rates which would otherwise be payable on the valuation or part of the valuation of the properties concerned and, to that extent, the allowance will have the effect of abolishing the burden of rates. Grants corresponding to the total of the allowances made will be paid each year by the Minister for the Environment to rating authorities under section 9 of the Bill.
The main advantage of this approach is that it allows the Exchequer to take over fairly simply and directly the liability for rates on all property qualifying for the new rating reliefs. The Exchequer, in other words, will step straight into the shoes of former domestic and other relieved ratepayers. As will be clearly seen, the full cost of domestic derating is being met by the State. No part of the burden will be transferred directly or indirectly to local authorities or other ratepayers.
Section I defines the categories of property which will qualify for the new reliefs and section 2 prescribes the amount of the rateable valuation of these properties which will attract relief. In case of a refusal by a rating authority to make an allowance in respect of a property, the rated occupier may under section 7 (1), apply to the District Court to have the allowance made. In effect, then, the District Court —and the higher courts if further appeals are taken—will have the role of deciding on appeals against decisions by local authorities on the interpretation of the main definitions in the Bill.
A domestic hereditament is defined as any premises which is used as a dwelling and which is not a mixed hereditament. The definition extends to yard, garden and the normal domestic out-houses and so on. Where these carry a separate valuation from the dwelling itself they will still be regarded as domestic, if the valuation does not exceed £1 in the case of land, or £2 in the case of buildings.
Use of a dwelling to provide lodgings will not of itself disqualify a premises from domestic status. This means that houses listed, as distinct from registered, with Bord Fáilte will not thereby lose their entitlement to domestic rates relief.
Registered guesthouses under the Tourist Traffic Acts are in a different category from ordinary dwellings and, as such, they cannot qualify for relief as ordinary dwellings under the Bill.
Many of these registered guesthouses in addition to the accommodation specially and permanently set aside for guests will also include ordinary domestic quarters. Such guesthouses will qualify for some relief as mixed hereditaments.
Domestic property will be relieved of rates on the whole of its effective buildings valuation and on any adjoining land valuation which does not exceed £1.
A mixed hereditament means a premises used partly as a dwelling to a significant extent and partly for another or other purposes to a significant extent. The point of the latter qualification is that if the domestic use of a premises is insignificant it will be regarded as wholly non-domestic, while if the non-domestic use is insignificant it may be regarded as wholly domestic.
Unless an application is made to the Commissioner of Valuation under section 7 (2), the rateable valuation of the domestic portion of a mixed hereditament will be taken to be one-third of the total valuation of the property or £18, whichever is less. I would like to emphasise, however, that where this formula is felt to bear unfairly, the rated occupier concerned may apply, through the rating authority, to the Commissioner of Valuation, with appeal from the latter's decision to the Circuit Court to have the domestic and non-domestic elements in his valuation specially apportioned. The rating authority themselves are also empowered to take this initiative.
"Secondary school" is defined as a school not already exempted from rates which is recognised as a secondary school by the Minister for Education. Relief of rates will extend to all of the buildings forming part of the school complex, including any buildings which are not separately valued and which are used to provide other education. Relief will also be granted, subject to a limit of £40 valuation on the amount relieved, to land belonging to and used in conjunction with the school.
The Government's undertaking to abolish rates on bona fide community halls responds to a long-standing aspiration of voluntary groups involved in community work. “Community hall” is defined in the Bill as a hall or similar building which is not mainly used for profit or gain but for purposes which both involve participation by inhabitants of a locality generally and are recreational or otherwise of a social nature. Use of a hall for sports purposes will not of itself make a premises a community hall. On the other hand, a hall is not disqualified from being a community hall simply because it is normally used by persons of a particular age group or a particular religious denomination.
Registration of a premises under the Registration of Clubs (Ireland) Act, 1904, so as to enable drinking facilities to be provided for club members will, however, rule out the recognition of that premises as a community hall. Community halls will be relieved on the whole of their buildings valuation.
Relief of rates is also being granted on those farm buildings which, because they were erected before 1 March 1959 do not already enjoy exemption from rates. This particular relief is important. Farmers with older non-domestic buildings had to pay full rates on those buildings up to now. On the other hand, farmers with modern buildings erected since March 1959 were totally exempt. I am happy to bring that anomaly to an end.
Where a farm building is separately valued, relief will be given on the whole of the valuation concerned. Where a farm building is included in the same valuation as a domestic hereditament, the whole valuation will be treated as domestic. In any other case, that is, where a farm building is associated in the same valuation with a commercial or mixed property, there is provision in section 7 (3) for establishing the part of the valuation which should qualify for the rates relief.
The definition of "domestic hereditament" extends to all property used for residential purposes, whether owner-occupied or rented. The Bill contains a number of provisions designed to ensure that the benefit of domestic rates relief is passed on to the tenants of rented accommodation. The position of rented small dwellings within the meaning of the Local Government (Rates on Small Dwellings) Act, 1928 is dealt with in sections 6 and 18. These consist of all local authority dwellings provided for letting and of privately rented dwellings with a valuation of not more than £8 in Dublin and, in general, or not more than £6 elsewhere.
What is peculiar to these small dwellings is that, contrary to the normal position under rating law, liability for rates falls on the owner, or landlord, rather than on the occupier, or tenant. The landlord can, however, recover the rates paid by a series of additions to the rent spread through the year.
Section 18 of the Bill has the effect of removing the authority for the rates-linked supplements to rents previously levied by landlords of these small dwellings. Section 6 makes corresponding transitional provisions for the 1977 rate.
Section 5 of the Bill deals with rented accommodation other than small dwellings. The section is long and complex but its object is simple. For a tenant who was not previously directly liable for rates, the section provides the right to an allowance from the landlord equal to the rates element obtaining in his rent before removal of domestic rates.
Difficulty may arise in calculating the amount of this allowance where a unit of letting is not separately valued. There is provision, accordingly, for either landlord or tenant to apply to the rating authority for apportionment of the valuation. An appeal may be taken to the Commissioner of Valuation under section 7 against the apportionment made by the rating authority. In any case of a due allowance not being made by a landlord, the tenant is enabled under section 5 to recover the amount as a simple contract debt in any court of competent jurisdiction.
The cost to the Exchequer of the reliefs provided in the Bill is estimated at over £80 million in 1978. This is adding substantially to the proportion of the current income of local authorities being contributed by the Exchequer. In 1976, State grants met 40 per cent of local authority current income; for 1978 the figure will be about 61 per cent. Even more telling is the increased contribution to the overall rates income of local authorities being made by the Exchequer. In 1976, the State paid £1 out of every £4 which would otherwise fall to be raised by local authorities in rates. In the current year, the State will be paying nearly £2 out of every £3.
A financial liability of this size has important implications for the Exchequer since it has to be fitted in with the needs of other programmes, including the capital requirements of local authorities and the needs of other services financed by the Exchequer, many of which are vital to the creation and maintenance of employment. There is a need, then, to ensure the continued harmony of local and other programmes of expenditure. There is a need also to take reasonable measures to protect the interests of non-domestic ratepayers, including farmers, small shopkeepers, people with businesses of one kind or another who remain liable for rates.
Section 10 of the Bill accordingly enables the Minister for the Environment, with the consent of the Minister for Finance, to issue directions to local authorities limiting the amounts to be provided in their estimates of expenses, and, in the case of rating authorities, in their rates in the pound. If, however, an authority seek to include an amount in their estimate of expenses or in the rate in the pound which is greater than any limit notified, the estimate or the rate will be deemed to be reduced to the maximum amount allowed by such limit.
Section 11 makes a provision, complementary to section 10, requiring any decision by a local authority authorising expenditure over and above that provided in their estimate of expenses, to have the sanction of the Minister for the Environment. Sanction may be given either generally or in particular cases under section 11 of the Bill.
It will be noted that these proposed powers of ministerial control are framed so as to ensure that, with the responsible co-operation of all concerned, little if any interference will be caused to the free ordering of priorities by local authorities. I can instance, in support of this statement, the manner in which rating authorities have been able to operate as freely as before within the 11 per cent limit on rate poundages which I notified for the current year.
Among the remaining minor provisions of the Bill, I will draw attention only to section 13 which is designed to simplify the procedure for the making of the rate. For some time now, at least two meetings of a rating authority have been required for the making of a rate: an estimates meeting, frequently extending over a number of meetings, at which the estimate of expenses is adopted and the consequent rate in the pound "struck" or determined, and a later "rates" meeting at which the rate as struck is assessed on individual valuations.
The convening of the elected council for a special "rates" meeting is not really necessary because the substantive decision in relation to the rate in the pound has already been taken by the council at the estimates meeting and cannot be varied.
Elected members are at present required by law to become involved at the "rates" meeting in endorsing the applotment of the rates. The applotment must be carried out in strict accordance with the effective decision taken by the council at their estimates meeting. It is, therefore, a function proper to the ordinary routine administration and clerical procedures of a local authority, and section 13 relieves the council of the duty of treating it as a policy matter proper to the elected council. I must emphasise, however, as indeed the section itself makes clear, that the procedure surrounding the estimates meeting of a rating authority remains unaffected by this new provision.
The present Bill makes no provision in relation to the future valuation of new and improved domestic property. The Tánaiste and Minister for Finance has already adverted to the possibility, in the wake of domestic rates abolition, of a global rather than individual valuation of domestic property being carried out for each rating area in future. The Tánaiste has indicated, however, that the matter is still being examined. Depending on the outcome of this examination and on the timing and the content of any proposals which may emerge, either the present Bill may be amended on Committee Stage or a separate Bill may be presented to amend the Valuation Acts.
I put the present Bill before the House, then, confident in the knowledge that it fulfils our stated Manifesto undertakings for relief of rates. I realise that some Deputies may advocate the extension of rating reliefs to other categories of property. I think it is only fair to advise them in advance of my general attitude on the point. I feel that the Bill should not be stretched beyond the reliefs promised in the Manifesto. I consider, in other words, that the question of derating other classes of property will best be examined when more experience has been gained of the operation of the Manifesto reliefs.
I commend the Bill to the House.