Seanad Éireann debate -
Wednesday, 24 Feb 1954

Vol. 43 No. 5

Local Government (Temporary Reduction of Valuation) Bill, 1953—Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Local Government (Mr. Smith)

I announced last August that with a view to encouraging building I intended to introduce legislation which would extend rate remission to a large variety of buildings not at present benefiting by it. This Bill implements that promise.

It will extend rate remission to such buildings as shops, business offices, hotels, and factories, if they are built or improved within the prescribed period of three years from 27th July last.

The remission will last for seven years and will be to the extent of two-thirds of the rates on the valuation of new buildings or the increase in the valuation of existing buildings that are enlarged or improved. This means that if a new building is valued at £90 it will, if it qualifies under the Bill, be assessed to rates on only £30 for seven years. If an existing building is improved and the valuation goes up from, say, £60 to £90 the building will be rated on £70 for seven years. I should mention here that when the valuation of an existing building which has been improved goes up the increase may be due in part to the improvements, in part to earlier improvements which have escaped notice, and in part to the fact that the old valuation was completely out of date. The remission under this Bill will be given on two-thirds of the total increase in the valuation following improvements irrespective of the cause of the increase.

Because of the large variety of buildings which are already entitled to rate remission or other assistance from public funds it is necessary to make a number of exceptions to the rate remission provisions of the Bill. These exceptions are set out in Section 3. Cottages or houses erected by local authorities under the Labourers Acts or the Housing of the Working Classes Acts will not get rate remission under this Bill as they are already subsidised out of rates and State funds. Where, however, a cottage or house has been sold by a local authority the occupier will receive remission under the Bill in respect of any enlargement or improvement carried out by him without assistance under the Housing Acts or the Housing (Gaeltacht) Acts. The Housing Acts and the Housing (Gaeltacht) Acts have their own provisions for rate remission and consequently building work carried out with the aid of grants or rate remission under those Acts, including houses erected or reconstructed by private persons and public utility societies, will not be entitled to remission under this Bill.

Other exceptions are new or improved farm buildings, which get the benefit of seven years' deferment of valuation under the 1852 Valuation Act, and buildings which get remission of rates under the Undeveloped Areas Act, 1952. Finally, the remission will not apply where work of a trivial nature of alteration, extension, repair or renewal is carried out on an existing building. The commissioner of valuation will be empowered to decide whether the work is of a trivial nature and there is provision for appeal against his decision.

Under Part III of the Bill I propose to deal with the situation which has arisen in Buncrana as a result of the increase in valuation from £7,563 at 1st March, 1950, to £11,445 at 1st March, 1951, which followed on the urban council's request for a revision of all rateable hereditaments in the urban district. This increase caused a large increase in the amount of the county demand on Buncrana which is calculated according to valuation. Part III of the Bill and the Schedule will bring the valuation of the urban district for county demand purposes back to what it is estimated it would have been if no general revision had occurred and only normal increases had taken place. In the year 1963-64 the county demand will be based on £11,520; from then on the ordinary basis of calculation will apply.

Part IV of the Bill is necessary to provide that rate remission under the Local Government (Remission of Rates) Acts, 1940-1952, which expired on 31st March, 1953, will be given in cases where work was commenced on dwelling-houses coming within the scope of the Acts before 27th July, 1953, and completed before 31st March next. If the work was commenced on or after the 27th July, 1953, and completed within the prescribed period, the rate remission granted under Part II of the Bill will apply.

Mr. Douglas

I think the principle of this Bill is acceptable to all sides of the House and any points that arise would arise on the Committee Stage. I would be glad if the Minister, when he is replying, would explain the reasons why there is objection to postponing the increase in rates for a certain number of years and provision made instead for a remission. It would be very much more advantageous, more attractive and less complicated in many cases if you simply provided that only one-third of whatever increase the commissioner of valuation would fix would come into effect for a period of years. I do not know all the details, but I know that certain people feel that a number of other matters might have been provided for, such as the cost of licences. I suppose the E.S.B. charge will not arise now because of the change of system and I understand there are also certain elements of local government which would be affected by a change. I do not know very much about this particular matter. I have been asked by several people if the Minister could not deal with it in the way I have suggested. I am simply asking him, when he is replying, to give the reasons why the method adopted is a remission of rates rather than a postponement of a full increase.

Mr. McCrea

I, like Senator Douglas, welcome the Bill, but the Minister made one statement during his remarks which, to my mind, would make the Bill valueless. He suggested that where houses have not been revalued for a great number of years the remission of rates would not apply. In every case where people have appealed against increased valuations that has been the defence put up by the valuation commissioner, that the premises had not been revalued for a great number of years.

Another point on which I disagree is that it only goes back to July, 1953. It must be known to the Minister and to the Government that when the Tourist Board was established many hoteliers throughout the country had to carry out extensive alterations and enlargements if they were to carry on business. In every case that I know the valuations were doubled. I think the Minister should have taken that into consideration but we may move some amendments to this Bill before it goes through.

Mr. Summerfield

I only want, in a few words, to say how much this Bill is welcomed by industrial interests. The Associated Chambers of Commerce, and similar bodies, have for years been urging on this Government and its predecessor that a Bill of this kind should be introduced. I feel that any criticism that will arise on the Committee Stage will be in the nature of highly constructive criticism. I formally welcome this Bill on its Second Reading.

Mr. S.T. Ruane

I agree with Senator McCrea that the concessions in the Bill do not go sufficiently far back. Very recently, the E.S.B. varied their system of fixing the overhead charge. The valuation figure has now been substituted by the number of rooms lighted by electricity. Therefore, any concession people might secure as a result of this Bill goes by the board as a result of the new E.S.B. regulations.

The Bill does not go sufficiently far back to give relief to the people who deserve it and who are entitled to get it.

Professor Stanford

I am not quite clear about one point: the Minister said something on it. I take it that I am right in believing that ordinary residences do not come within the scope of this Bill. That is so, Mr. Minister, I take it? In that case, it amounts to this, from my point of view. If this means that certain buildings will get a remission of rates and that the kind of building I am primarily interested in, that is, an ordinary residence, cannot get remission of rates for improvements or extensions it amounts to the fact that we who are primarily interested in ordinary residences will have to pay rather higher rates to make things easier for the people who are interested in different kinds of buildings. Ultimately that is rather unfair.

It is quite true that our policy has been to stimulate business and industry generally but I think that in some ways that is a short-sighted policy. The Minister ought to keep in mind living conditions. It is as important for the welfare of the State that ordinary people should be able to build on to their houses without incurring a large increase in rates and perhaps a higher valuation as it is to cover the matters that are covered in this Bill. I hope I am not misinterpreting the effect of the Bill but that is the ultimate effect, as I see it. Mr. X, Mr. Y and Mr. Z, who have business premises, will benefit. Mr. A, Mr. B and Mr. C, who have ordinary residences and who would very much like to improve them and who have, perhaps, a growing family and really need to improve them do not benefit under this Bill but will pay higher rates. The rates must come from somewhere: the same amount of rates must be collected. I think that, in the end, that is a short-sighted policy.

I should like to see the Bill which is before the House allow ordinary residences to be extended and improved with some certainty that the rates would not go up to an unbearable degree. If I am wrong, perhaps Senator Douglas will correct me in this matter. If Senator Douglas thinks I am wrong, I will be grateful if he will correct me here and now and I will not continue on this line of argument.

Mr. Douglas

I merely said to the Senator who is sitting next to me that according to my reading of the Bill it applies to all houses except to those which are exempted because they were already getting the benefits.

Mr. Smith

That is the position.

Professor Stanford

Am I to understand that ordinary residences will come under this Bill?

Mr. Smith

If not already relieved.

Professor Stanford

Then I will withdraw the aspersions which I was casting on the Bill and I will congratulate the Minister on a very desirable Bill.

Mr. Fitzsimons

There is an old grievance outstanding between county councils and urban councils for a long number of years. It is in relation to a county council demand on urban districts and it is based on the gross valuation instead of on the net valuation. For a long number of years, the urban councils of Ireland have been appealing to the various Ministers here to do something about the matter. The view of the Minister was that until the county councils would agree to recommending the repeal of the relevant section in the 1927 or 1928 Act he would not do anything about it. It is no harm to remind him now that the General Council of County Councils passed a resolution recommending that that section be repealed.

It is a hardship on a large number of urban districts throughout the country to have to pay rates on something in respect of which they do not collect at all. In other words, if my valuation is £30 as a result of doing up my property and it is now reduced to £20, or whatever it may be, the urban council will pay to the county council on a valuation of £30 instead of on a valuation of £20. That is an injustice. I happen to be the chairman of a county council but, nevertheless, I believe that this is an injustice and that the Minister should remedy it on the Committee Stage of the Bill. A ministerial amendment would be accepted by this House and by the Dáil. I feel I have a mandate from the county councils of Ireland because the general council recommended this step to the Minister. I appeal to the Minister to make an effort now to remedy this injustice which has existed in this country since 1928. I ask him to bring in an amendment on the Committee Stage because I believe that the time is now opportune to do so.

Mr. McGuire

If my memory serves me correctly, this is the first Bill in my whole time in the Seanad that has not caused some new form of taxation, either direct or indirect. Therefore, I welcome it. It is the first sign of some alleviation of taxation.

I do not think that very much can be said on the Second Reading of this Bill, but quite a lot can be said on the Committee Stage. It is a Bill that will require quite a lot of discussion on the question of relief of rates. I have mentioned that I welcome this Bill as it signifies some alleviation of taxation. An interesting point is that the relief seems to come at the expense of the local authorities and not of the Exchequer. I hope that, having given a lead, the Government having given some relief to us through the local authorities, the next time they come with a Bill they will give us some relief direct from the Exchequer itself.

Mr. Smith

I understand the point made by Senator Fitzsimons. It is not a matter that I could deal with in this measure. I can say, however, that my Department are considering it. While I am not giving any undertaking, I can say that from the first occasion on which I met the representatives of the municipal bodies, I felt that there were legitimate grounds for complaint on their part. The Senator himself stated that he happens to be a member of two bodies in his own county. He is chairman of the county council and he is associated with an important urban council also. While the municipal bodies might make a demand like this, county councils might not receive it too well if the demand were conceded. I was anxious that, as between the municipal bodies and the General Council of County Councils, they might find some means of doing away with a burden which might be bearing a bit heavily on the urban areas and especially the smaller ones. I cannot deal with it now, even with the best will in the world, but an opportunity may present itself when I can.

Senator Douglas made a point that was made in the other House. It seemed to suggest that in considering a measure of this nature one should have regard to all the other charges imposed by other bodies—income-tax, E.S.B. charges, and so on. I do not believe that in a measure of this nature one is called upon to consider these matters. I have gone, with the approval of the Government, as far as one could justifiably go. I think it was Senator McGuire who said that this will not result in imposing any burden upon the general taxpayer. That is just the point. It does create some difficulty in the smaller urban areas where these reliefs will be conceded. The rates in many of those places are high and those who are called upon to carry the burden do not look too kindly upon a Minister or Government being too generous at their expense. In going as far as we propose to go, we are meeting the case fairly enough.

Senator McCrea seemed to misunderstand the reference in my opening statement to improvements carried out over an extended period. We are aware that improvements were carried out on all sorts of premises over the last 20 years and have not been checked up by the valuation office. As the law stood, if an owner were to add an extension the valuation office could come along and find that all those improvements of 20 years were not accounted for, and if we were not to take some power to cover that situation it would deter that man from effecting any addition to his premises. The result is that instead of creating the situation that Senator McCrea seemed to think we were creating we are doing the very opposite. As a result of the Bill, if an owner of premises carries out reasonably substantial improvements and if, on the approach of the valuation office it is found by them that he had done a considerable amount of work over a period of years, that work will be included with the new work and he will get the relief in respect of it. That is designed to encourage him to go ahead with further improvements in the full knowledge that he will not be penalised in the manner that Senator McCrea seemed to think he might be.

We had some amendments in the other House and I suppose Senators may wish to table some amendments for the Committee Stage here. I do not wish to come here talking about the urgency of this measure. It is not vital but I would like to get it as soon as the House can conveniently give it to me.

Question put and agreed to.

Committee Stage ordered for Thursday, 4th March.