I welcome the Minister of State, Deputy Simon Harris.
Valuation (Amendment) (No. 2) Bill 2012: Committee Stage
Amendments Nos. 1 and 4 to 6, inclusive, are related and may be discussed together.
I thank the Leas-Chathaoirleach for facilitating the Committee Stage of the debate today.
The amendments to section 2 provide for new definitions and for deletions, substitutions and extensions of existing definitions in the 2001 Act. Amendments Nos. 1 and 4 delete the definitions of "alternative valuation", "determined valuation" and "current valuation list". The definitions of "alternative valuation" and "determined valuation" are no longer required as a consequence of proposed changes to the provisions dealing with occupier assisted valuation. The definition of "current valuation list" is deemed to be superfluous and has the potential to cause confusion, given that there can only be one valuation list at any one time and for which there is an adequate definition in the Act.
Amendment No. 5 makes the following three changes. First, the definition of "material change of circumstances" is extended to include relevant property becoming licensed or ceasing to be licensed under the licensing Acts 1833 to 2011. Second, a definition of "officer of the commissioner" is inserted. This term encompasses persons who are in the employment of the Valuation Office and also persons who are engaged by the Commissioner of Valuation on contract as part of an external service provision or outsourcing arrangement. This definition is needed to ensure functions assigned to officers of the commissioner throughout the Act can also be carried out by persons engaged to work on an outsourced basis on behalf of the commissioner. Third, the definition of "rating authority" inserted by the Local Government Reform Act 2014 is extended to include Inland Fisheries Ireland and to state that the functional area of Inland Fisheries Ireland is the State and its territorial waters.
Amendment No. 6 deletes the definition of "substituted valuation" as this term is no longer used in the proposed changes to Part 5A dealing with the occupier assisted valuation. This amendment also changes the definition of "value" which is a technical tidying-up amendment resulting from changes made to the Valuation Act 2001 in the Local Government Reform Act 2014. That Act deleted paragraphs 1(o) from Schedule 3, therefore all references to that paragraph must also be deleted.
Amendments No. 2, 26 and 77 are related and may be discussed together.
I move amendment No. 2.
In page 3, line 23, after “Act” to insert the following:
“, or sporting, community or other non-profit making entity not currently defined as a charity, other than part of premises used to sell alcohol”.
The impetus for these amendments is the community and not-for-profit organisations that have lobbied that their premises would be exempt from rates, other than where they have a bar and which in such cases should be rated on the space it occupies.
On a point of order, the Leas-Chathaoirleach has moved on from the very important amendments that Fianna Fáil and Sinn Féin have tabled that were to be discussed with amendment No. 1. He allowed for a discussion on amendment No. 2.
Amendments Nos. 1 and 4 to 6, inclusive, are Government amendments. Amendment No. 2 is a Sinn Féin amendment, while amendment No. 3 is Senator Byrne's amendment. I am technically correct. The Minister of State will respond, after which I will call the Senator.
I thank Senator Kathryn Reilly for her amendments, which I cannot accept. The proposed amendments are very broad and would potentially exempt a very large number of organisations and would probably exempt many entities that it does not intend to exempt. While I understand what the Senator is trying to achieve by the amendments, they raise a number of serious questions. What sports entities would be exempt? Let me give an example. Does it mean or could it have the unintended consequence that Croke Park and the Aviva stadium would be exempt except for their bar areas? These stadia are used as conference centres also and are in competition with other venues that would not be exempt. What about high end golf clubs? These are also sporting entities. There is the issue of commercial gyms. Exempting any not-for-profit club venue could have significant implications that I do not feel have been thoroughly considered in these amendments. As Members will be aware, the Government has proposed an amendment to this area which I believe is a balanced extension of the current exemption available to sport clubs and which we will deal with later in the debate. I regret that I cannot accept the amendments.
What amendments are they?
It is the Sinn Féin amendment No. 2. which is being discussed with amendments Nos. 26 and 77.
Which is the Government amendment that deals with this?
It comes up later. It is dealt with in amendment No. 76.
Does Senator Kathryn Reilly wish to reply to the Minister of State's response?
I will wait for the discussion on that amendment and if I need to resubmit amendments on Report Stage, I reserve the right to do so.
I wish to speak on the amendment in the context of the charitable purposes of organisations. I put down a marker that one of the issues we will come to later is about child care facilities. The amendment deals with only those that are not for profit and for disadvantaged families. I would like to see child care facilities that are not for profit and I think the State should be encouraging these types of organisations. I want it to be noted in the event that I table a Report Stage amendment.
I move amendment No. 3:
In page 3, between lines 23 and 24, to insert the following:
“(c) in the definition “community hall” by deleting “other than a premises of a club” and substituting “other than the licensed premises, of a club”.
This is the amendment that the Minister of State says he will deal with later. As essentially it is the same as our Bill which the Government accepted in the Dáil, will my amendment be accepted, given that it would do the job? The Government amendment seems lengthy and complicated. Amendment No. 3 would just exempt the part of a club that is not licensed. The Government amendment does not go as far as what is proposed in this amendment because the Government amendment includes places such as parts of the club that would be rented out to other sport clubs. Amendment No. 3 is very simple. It demarcates the licensed area of a club, which will be available on a map for the pub licence for the purposes of the club, and exempts everything else. Is it correct to state the Minister of State is not going as far as that?
The proposed amendment is, as Senator Thomas Byrne outlined, the same amendment proposed in the Private Members' Valuation Bill 2014, introduced by Deputy Barry Cowen in the other House. The Private Members' Bill had its Second Stage debate in the Dáil on 4 July 2014. In the course of that debate, the response delivered on behalf of the Minister for Public Expenditure and Reform pointed out the technical flaws in what was proposed. We acknowledged the intent of the Bill, however, while recognising the technical flaws in it, and we committed to taking a look at it in our Valuation Bill.
We do not believe the proposed amendment would work in practice and I will outline the reason. In summary, once a club is registered under the Registration of Clubs (Ireland) Act 1904, it is registered in its entirety. It is not possible to distinguish between parts of the club where alcohol can be sold and parts where it cannot. The amendment would not give relief to sports clubs as intended. I will propose a separate amendment to Schedule 4 to address this issue.
I have listened to the Minister of State's comments. My understanding was that there is a map of licensed premises, as there usually is with any application for licensing. It sets out the usual red line. If the Minister of State is indicating that is incorrect, I will accept it, but what he is proposing would not go as far as we intended or what Government Deputies are advertising in their local newspapers. It is a little more complex than that. I will press the amendment.
It is somewhat unfortunate as the Government amendment comes into play. That amendment will go further than the status quo and ensure only commercial activity within a sports club is rateable. That is not the current position. A map does not delineate the licensed area but is rather used for other purposes. Under the Registration of Clubs (Ireland) Act 1904, the club would be registered in its entirety. We have a genuine technical concern that Senator Thomas Byrne's amendment, if we accepted it, would result in the status quo and it would not be workable. The amendment I will introduce later will strike the right balance between acknowledging the fact that sports clubs are playing a major part in communities and that we wanted to go further in giving them an exemption. We also want to ensure that the parts with commercial activity are rateable.
The Senator and I are aware that in our respective constituencies, as in small towns and rural villages everywhere, there may be a bar in a GAA club and one across the road that is not part of the club. It is important to have parity in such circumstances. Commercial activity will be rateable but other activities will not. Guidelines will be published by the Valuation Office in that regard. I understand very much what the Senator is seeking to do and I acknowledge the role played by Deputy Barry Cowen and Fianna Fáil in trying to get to this point. For technical reasons, I cannot accept the Senator's amendment and see the Government amendment as striking the right balance.
We will have an opportunity to debate the Government amendment as it is not grouped with this amendment. I will not delay the House at this time.
If the Senator does not wish to press the amendment-----
I will press the amendment, but I will not divide the House. I may put the other amendment to a vote.
If it is not put to a vote, it can be introduced again on Report Stage.
Yes, I will seek to introduce it again on Report Stage.
The Minister of State mentioned the 1904 Act. The vast majority of clubs throughout the country were not there in 1904. At the time, a club probably referred to an exclusive gentleman's establishment, which would be quite different from the community-based institutions encountered in the Minister of State's area in Wicklow or Senator Thomas Byrne's area in Meath. Perhaps this might be borne in mind. The clubs in mind for the 1904 Act were very strange organisations and Senator Ivana Bacik would certainly not approve of them, for example. This can be compared to today's average GAA or soccer club around the country.
I will take up that point, as perhaps Senator Sean D. Barrett made it more eloquently than I did. Although I do not wish to speak for Senator Thomas Byrne, it seems the purpose of his amendment and the Government amendment is to acknowledge that trying to fit sports clubs into the bracket of a community hall is an outdated process. We will have the debate later but, ultimately, at the end of this debate the legislation will be a better and clearer on what is the position regarding a sports club, commercial activity or a rateable premises.
It is not the responsibility of the Minister of State but there are people who have made millions of euro from our complicated club and pub licensing system. It is about time the Department sorted it out and codified the process.
Is the Senator pressing the amendment?
No. I will reintroduce it on Report Stage.
I move amendment No. 7:
In page 4, between lines 29 and 30, to insert the following:
"3. An occupier shall not be liable for any unpaid rates due to a rating authority if such rates were incurred during the occupancy of the relevant property by a previous occupier.".
This amendment derives from Private Members' legislation brought forward in the Dáil by a colleague. This seeks to make an occupier exempt from rates when he or she takes over a premises with a bill outstanding from a previous occupier. If legislation could be changed, it would reflect reality. There was a court case in Swords some time ago in which a judge refused to allow a judgment to be registered against an individual landed with a rates bill from a previous occupier. That seemed reasonable and fair and as the courts have acted in this way, we would like to insert this amendment in the legislation.
I thank the Senator for the amendment. This is a rates issue and measures have already been taken earlier this year by the Minister for the Environment, Community and Local Government in this regard. The Local Government Reform Act 2014 was enacted in January and introduced a range of reforms to the local government system. It included some important measures to address some of the main issues affecting payment of commercial rates by businesses, including repeal of subsequent occupier liability. Schedule 2 and Part 6 of the Act repeal subsequent occupier liability within rating law by amending section 71 of the Poor Relief (Ireland) Act 1838. I know that Senator Sean D. Barrett will give out to me for quoting legislation from so far back. It also deleted section 19 of the Poor Relief (Ireland) Act 1849, the effect of which was to remove the liability placed on new occupiers of properties for up to two years of outstanding rates of the previous occupier.
The commencement of the repeal was given effect to in the Local Government Reform Act 2014 (Commencement of Certain Provisions) (No. 2) Order of 2014, SI 146 of 2014. It took effect from 24 March 2014. This is a strong indication of the Government's commitment to removing any barrier to enterprise development and supporting business start-ups or existing businesses wishing to expand or relocate. It was not the intention in removing subsequent occupier liability to undermine local authorities' collection powers and put at risk the collection of rates income. That is why a related provision within the Local Government Reform Act 2014 indicated that all unpaid and outstanding rate liabilities should be discharged prior to the transfer of ownership or other interest in a property, including tenancy. This transfer of interest must be notified to the local authority within two weeks of its effect. A penalty has been provided where the owner does not meet obligations under the Act. This measure strengthens local authority collection powers in the area without causing any additional burden for subsequent occupiers. Furthermore, this section provides that any rates due by any owner of a relevant property and not discharged shall remain a charge on the property. The amendment took effect from 1 July 2014.
In principle, we agree with what Senator Thomas Byrne's amendment is trying to do and contend his aims were realised in the Local Government Reform Act 2014.
Amendments Nos. 8 and 9 are related and may be discussed together, by agreement. Is that agreed? Agreed. Acceptance of amendment No. 8 involves the deletion of section 4.
The Bill, as initiated, made provision to enable the commissioners to have certain valuation functions or portions of functions performed by external service providers. The overall purpose of the provision is to enable the commissioner to augment the internal capacity of the Valuation Office by engaging external resources. It is an enabling provision, and initially the commissioner is expected to pilot such outsourcing in selected rating authority areas. This amendment now gives the commissioner the flexibility, where it is deemed necessary, to restrict the functions that may be performed by external service providers to, for example, particular classes of relevant property, such as retail, office or industrial units, or that outsourcing could be restricted by geographical area within a rating authority area.
This amendment also means that section 4, as published, will be deleted. The amendment originally envisaged for section 4 was made in the Local Government Reform Act 2014. This needed to be done early in 2014 to ensure there would be no possibility that the valuation list would be deemed incomplete. Heretofore, State-occupied property that was not rateable was valued. This was an inefficient use of Valuation Office resources. These properties were not valued as part of the Dublin city or Waterford revaluations and the Bill will mean that if the property is not rateable, it does not have to be valued. The amendment needed to be made in early 2014 to align what has to be done in practice with legislation.
The amendment is about speeding up the process of revaluation so that people can benefit from a fair and accurate valuation in a timely fashion, while recognising that we do not wish to waste the resources of a State office by having it value buildings that are not rateable.
I have a question on outsourcing, if I may be so bold. Two or three years ago the issue of outsourcing was first raised, with the four Dublin local authorities and Waterford being done to date. If we kept at this rate, we would not get to the end of valuation of properties in the State until 2029.
The progress made has been miserable. At the time it was proposed that funding would be given to the Valuation Office to employ more people, but that did not happen and outsourcing was mentioned. Now we are discussing giving more powers to outsource. Has any consideration been given to self-assessment for rates? We have accepted self-assessment for the local property tax. The calculation of rates is laid down on paper. I have always made this argument. My understanding was that the rateable valuation was calculated as the best achievable rent of the property multiplied by the square footage. The best achievable rent in properties in the past five years has more than halved but nobody has come knocking on my door to say their rates have reduced by more than 50%. Now that outsourcing seems to be accepted, has any consideration been given to self-assessment?
The Senator has hit the nail on the head; it has simply taken too long to carry out the valuations process, which means that people are at a disadvantage while they are waiting for a valuation to be carried out. The entire purpose of this legislation is to speed that up. That is one of the reasons we are looking at giving the Valuation Office the ability to outsource certain tasks subject to certain provisions. As the Senator will have seen in my remarks, we are giving the Commissioner of Valuation the ability to limit and restrict those functions to what he or she believes to be appropriate. We intend to pilot this in Carlow and Kilkenny and if it works to continue to roll it out.
I will come to the issue of occupier-assisted valuation when we discuss amendments Nos. 31 to 37. In this Valuation (Amendment) (No. 2) Bill we are very eager to ensure there are as many inputs as possible for occupiers to give the information they have. This legislation will allow the Valuation Office to request certain information of the occupier, which is a step forward and to be welcomed.
They will be stakeholders obviously.
Absolutely. We will get to discuss much of this during the course of this debate. We have increased the length of time for occupiers to make representations, which is a more informal part of the appeals process than having to go all the way to a tribunal.
It is also important to give some context as to why the process has taken so long. The Senator, as a businessman, will recognise the shock that took place in our property market has made it quite difficult to know when it is appropriate to look at valuations and revaluations.
I give credit to my officials and those in the Valuation Office. Limerick is now nearly finished. While the Senator is right that there is a significant amount of property left to be revalued, we now estimate that approximately 50% of the valuation base in the country has been revalued. That equates to approximately 35% of buildings. I am very eager that this would happen as quickly as possible so that everybody can benefit from the more modern provisions of the legislation.
I wish to make observation on what Senator Sheahan has said - I should not comment as Leas-Chathaoirleach. In my 30 years in business I do not believe I have ever seen a valuation or a valuation appeal where there was a decrease in rates - it is as scarce as teeth in a hen. The Minister of State can comment on that the next day.
I have a comment on that one.
I am delighted to side with the Minister of State because Government amendment No. 8 involves the deletion of section 4 of the Bill, as does my amendment No. 9; therefore, there is a moment of harmony and agreement.
The purpose of my amendment was as follows. We have an economics problem in the public sector; capital is free. Part of capital when one builds buildings is that there is an ongoing tax liability, which is what I am seeking to incorporate. Lest this agreement drifts into disagreement, I will sit down and point out to the House that the Minister of State and I both propose the deletion of section 4 of the original Bill.
I make the point that while we are in the process of revaluing, the actual valuation base will remain the same; therefore, for everyone who will see an increase, somebody else should see a decrease. I am sure people such as the Leas-Chathaoirleach will keep us informed of that process.
The amendment specifically enables the commissioner to use general market or aggregate data to determine the net annual value. This includes using statistical and computer-aided techniques to analyse the data. This provision will allow the commissioner to use technology-assisted techniques which will help in accelerating revaluations in particular - the issue Senator Tom Sheahan mentioned.
A similar provision was included in the Bill as initiated as an amendment to section 48 of the principal Act. Taking account of views expressed on the amendment to section 48, the insertion of this subsection in section 13 removes any doubt about the intention of the amendment.
Acceptance of this amendment involves the deletion of section 5 of the Bill.
This amendment is designed to provide in certain circumstances for the valuation as a single entity of certain non-contiguous properties. For example, this would include advertising stations, bicycle-hire stations and car parking spaces, each of which is occupied by the same person. The purpose of the amendment is to streamline the valuation process and to ensure the true economic nature of the entities, when aggregated, is reflected in the overall valuation. It is a sensible streamlining amendment.
Amendments Nos. 12 and 69 are related and may be discussed together.
These are technical amendments consequent on the removal of the current valuation list from the list of definitions in section 2 as superfluous. There can only be one valuation list at any one time and for which there is an adequate definition in the Bill.
The first part of this amendment, replacing subsections (3) and (4), are minor wording changes, including the replacement of the term "officer so appointed" with "person so appointed".
The amendment to subsection (5) confers an obligation on the valuation manager in drawing up and compiling a valuation list to reference relevant market and other data available and to endeavour to achieve correctness of value, and equity and uniformity of value between properties on that valuation list so that the value of each property is relative to the value of comparable properties in a rating authority area. This brings together the objectives of ensuring that values are correct in themselves and that they are correct relative to other values on the list.
The objective is to ensure that properties of equal value situated in the same rating authority pay equal amounts of rates and that one ratepayer is not given an undue competitive advantage over another. The revaluation of a rating authority is about producing a valuation list that is fair and equitable to all ratepayers in that rating authority area. As a result of a revaluation, properties of similar value should have a similar rates liability. In this regard, section 19(5) brings clarity to what is required of the valuation manager when compiling a valuation list, namely, that he or she must determine the correct value for the property and that the value must also be relative to the value of comparable properties on the same valuation list.
Producing a valuation list comprising valuations that are not relative to each other would result in similar properties having different valuations and as such would result in different rates liabilities, which would give certain ratepayers a competitive advantage or disadvantage, thereby negating the benefits of a revaluation.
This amendment causes severe difficulty. Constitutional issues have been raised over the effect of the amendment. Later in the legislation the Valuation Tribunal is required to determine the value of a property on an appeal and one that accords with the results required to be achieved by section 19(5), the criteria the Minister of State just set out.
It seems sensible that there be equity and uniformity of value between comparable properties and parties on the valuation list, and the Minister of State has outlined this, but various interested parties have sought legal advice on this area of the legislation. Some of these parties have met the Minister of State to discuss this and I spoke privately to him in Oldbridge, County Meath, to alert him to difficulties with some aspects of the Bill, such as this. Some parties believe the proposed amendment is actually a response to the Commissioner of Valuation and to the determinations of the Valuation Tribunal in a number of appeals brought by ratepayers that ended up in the High Court. There was a famous case relating to the Carlton Hotel - in one case six ratepayers received an appeal against the certificate of value relating to their property.
The tribunal, in its determination, referred to the difficulties encountered by the Commissioner of Valuation in gathering appropriate information from other similar businesses in the area. The tribunal noted comparative evidence was offered but was not persuaded it was decisive. The tribunal came to a conclusion in those cases that, I am advised, would not be possible if this section is put in place. It has been suggested to me that this new section is designed to prevent a situation like the one that arose in the Carlton Hotel case, which is responsible for many of these reforms.
We suggested the original Bill sought to override these cases and the Minister of State's predecessors took over a year to change this. The legal advice I have received says the amendment will achieve exactly what we objected to last time. The new section 19(5) was designed to prevent the Valuation Tribunal from operating as it did in those cases. If the Commissioner of Valuation applies a particular method during a revaluation of properties such as hotels, licensed premises, petrol stations, nursing homes and other properties where the net annual value is not readily ascertainable by comparison with the rents of similar properties, a ratepayer who, with expert evidence, challenges the method chosen by the commissioner in an appeal to the tribunal will be met with the reply that, if the commissioner's chosen method is set aside and another method is applied by the tribunal to achieve a more accurate result, it will distort the uniformity of value between the ratepayer's property and the properties of those who chose not to appeal. It is difficult to understand why a ratepayer who has appealed against a valuation should be placed at a disadvantage because other ratepayers may have failed or neglected to appeal.
I thank the various hotels and organisations that challenged the rate valuations in Fingal because they achieved something, namely, this legislation. We now wish to make sure the legislation does not prevent such challenges in future. The effect of this provision would be to prevent such cases proceeding. A ratepayer would be able to challenge the application of the commissioner's chosen method of valuation but not the method itself. I suggest that the effect of the proposed section 19(5) is almost identical to what I objected to before and I understood this was going to be changed. I suggest what is proposed is unconstitutional for the same reason that I objected previously. The Minister of State needs to re-examine this, although I know much work has gone into it. Assurances were given that issues such as this would not arise so it needs to be looked at. Perhaps the Minister or Minister of State might meet the various interested parties as they are representatives of affected businesses around the country with no hidden agendas. I will oppose this section and ask the Minister of State to think again.
Senator Thomas Byrne did raise this issue with me in County Meath yesterday and it is one we want to get right. As I outlined previously, providing a valuation list that comprises valuations that are not relative to each other, results in similar properties having different valuations, which results in different rate liabilities in the same area. This puts certain ratepayers at a competitive advantage or disadvantage over other people in the same geographic rateable area. It is only appropriate that when an appeal is being assessed the same criteria as applied in the original valuation be used.
When the Valuation Tribunal allows an appeal under section 37 with a view to amending the valuation, it will be required to do so in accordance with section 19(5). In essence, the Valuation Tribunal is placed in a similar position to the valuation manager when determining the value of a particular property. I think it would be peculiar to have the Valuation Tribunal applying different criteria from those used by the valuation manager to make the original valuation and I cannot think of an appeals process that works like that. The objective is to ensure the valuation manager and the Valuation Tribunal, on appeal, apply the same criteria when determining values.
The Valuation Tribunal is in exactly the same position as the valuation manager in that it must look at the information and data that was available to the valuation manager and form its own conclusions as to the correctness, or otherwise, of that valuation. Where a valuation is incorrect it can be changed by the Valuation Tribunal. The tribunal has extensive powers that are set out in Part 7 of the Valuation Act but both criteria must be weighted by the Valuation Tribunal. It would be inappropriate that the Valuation Tribunal, on appeal, would assess a valuation on different terms and by reference to different criteria from those considered by the valuation manager. It is also appropriate that ratepayers who appeal their valuations to the Valuation Tribunal and those who do not appeal have the values of their properties ultimately determined by reference to identical criteria, in other words, the criteria now set out in this section. Any other approach could result in a most unsatisfactory outcome.
Senator Thomas Byrne has alluded to the Carlton judgment and I wish to outline its conclusions. I will refer to extracts taken from the judgment of Ms Justice O'Malley, delivered on 11 April 2013. In her conclusion she stated "it seems to me that both sides are in error to the extent that they are each seeing one part of the picture". She went on to say:
The Commissioner is certainly correct in saying that uniformity and equity are essential to the administration of the rating system, as they are in relation to any tax. Like must be treated alike. However, there is a logically prior issue and that is whether liability to the tax in question has been properly assessed in the first place. There is no merit in the uniform application of a mistake.
I also cannot accept the contention that, under the Act, uniformity and the tone of the list have no role. It would, again, render the terms of section 31 an absurdity.
We are trying to get a balance between the correct value and equity and the tone of the list. We have consulted widely on this legislation, as the Senator acknowledged, and received a submission from the Society of Chartered Surveyors, much of which was encompassed in this section. If there is an opportunity for further engagement between now and Report Stage I would be happy to take it. My officials are in contact with the Irish Hotels Federation and we want to get this legislation right, though we also want to account for both equity and correct valuation.
The tribunal will be forced to choose between the correct value under section 19(5)(a) or equity and uniformity of value under section 19(5)(b). If a person is told the correct value cannot be examined due to the uniformity issue he or she will find that questionable. These amendments were made late in the day, after the consultation process ended, and the tribunal will be hamstrung. It will not really deal with appeals but rather mistakes made in the office. The question will not be whether the wrong procedure was used and the Carlton and Roganstown cases will be undermined by this legislation, which is a pity. There will be more cases before the courts because people will feel it is not fair that the correct valuation is not being considered. The correct valuation may be overlooked to allow for equity and uniformity of value. All properties will thus have an incorrect valuation and that is wrong and unconstitutional.
I must point out an important word that arises between sections 19(5)(a) and 19(5)(b), namely, "and". It is not correct that the tribunal will have to choose one legislative provision or the other. The tribunal will have to give account of both and that is the balance we are trying to establish. I reiterate, it is very important that when a valuation manager assesses a value the criteria he or she applies to do so, the two set out, are the same as those used in an appeals process.
There should not be a scenario in which, if one appeals a valuation, one gets assessed on a valuation rate using a different set of criteria from those that apply to a business person who has decided not to appeal a valuation. There must be consistency in the process.
With my officials, I would be happy to engage with stakeholders before Report Stage, but I am satisfied that this section strives to get the correct balance while also acknowledging, as outlined in the High Court, the need to take account of both aspects.
I appreciate the Minister of State's comments, but I am concerned with the net point that section 19(1A) would restrict the consideration of relevant market data and other data. The hoteliers seem united in their opposition. I am sure they have good grounds for doing so, all of which I might not appreciate. I am concerned for hoteliers who are still regaining their feet. NAMA has a few more hotels to sell and so on, but we appreciate all that hoteliers have suffered and what they are doing now to expand tourism and attract more visitors from abroad. I feel for them. They have communicated with me.
The Minister of State is a highly considerate man whose talents and expertise in this field I appreciate. I congratulate him on his recent broadcasts and so on. He has done well. He must forgive me, as I have been slightly delayed.
The Senator has gone a little ultra vires.
I appreciate the Leas-Chathaoirleach's indulgence. Perhaps the Minister of State might comment on what he believes to be relevant to the net point on hoteliers, relevant data and proper market considerations.
I thank the Senator. Like every Senator from the great tourism county of Kerry, he is right to be concerned about the hospitality sector, as we all are in this and the Lower House. We have taken many measures to try to help the sector.
It would not be correct to claim that we were not taking account of data. When discussing previous amendments, I made it clear that we were using new technology to ensure that we had the most information available to the Valuation Office. It is important to point out that a number of hotels have already benefited from the revaluation process. The valuation base is remaining the same. For every valuation that increases, another will decrease. The pie is not being increased in size. Rather, it is being redistributed in a fair manner to reflect current valuations. The data indicate that 50% to 55% of ratepayers have received reduced valuations. As a businessman, Senator Paul Coghlan will appreciate the importance of ensuring fairness. This is the balance that was found in the High Court. Everyone has an entitlement to a correct value, but it must be cognisant of other values of a similar nature in the same rateable area. It is important that some hotels and commercial interests are not placed at a disadvantage. There must be equity and correct values.
Crucially, the valuation manager will apply these criteria at the initial point. To apply a different set of criteria at the point of appeal would be in effect to begin a different valuation process, not an appeal. This could disadvantage those who did not appeal in the first instance.
Can I take it that the Minister of State will give this matter the consideration it requires before Report Stage?
As recently as last night and today I asked my officials to engage further with stakeholders, including the Irish Hotels Federation, IHF. I am happy for that engagement to continue between now and Report Stage. Some hotels have benefited from this system, but we are eager to take all views on board to ensure we have robust legislation over which we can all stand.
I am grateful to the Minister of State.
This issue goes to the reality of the situation, namely, the rates system is incredibly complex. It should have been abolished and replaced by a site valuation tax when the Government introduced the property tax. I believe that was the Government's intention. It certainly was the Fianna Fáil-Green Party Government's intention.
It will not matter if there is an incorrect value on a property, as that is not the only criterion. The Minister of State is right to point out that it is a case of and, not or, as long as everyone with a similar property has an incorrect valuation. If the valuation for every petrol station in the area is wrong, it does not matter as long as those properties are similar. That is the effect of the section. However, this is not the way to tax people. They should pay what they owe. The section does not help; rather, it creates further confusion and will undoubtedly lead to more cases in the High Court. They will involve not just having decisions quashed but also questioning the constitutionality of this legislation. We are charging a tax, a rate, and the matter must be taken in the most serious way.
It is a pity, as rates should be handled by the Department of Jobs, Enterprise and Innovation, not the Department of Public Expenditure and Reform. I often wondered why rates used to be handled by the Department of Finance when they comprise a jobs issue, in that they form one of the key costs affecting businesses.
Although I will oppose this amendment strongly, I ask the Minister of State to take time to consider the matter, although not as long as the last time, even if that was not his fault. The Bill has been on the Order Paper since August 2012. Business people are crying out for reform of their rates because they cannot afford to pay them. To achieve a resolution, will the Minister of State engage in short and sharp consultations with the bodies that represent the businesses that will be affected?
- Bacik, Ivana.
- Brennan, Terry.
- Burke, Colm.
- Coghlan, Eamonn.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- D'Arcy, Michael.
- Henry, Imelda.
- Higgins, Lorraine.
- Landy, Denis.
- Moloney, Marie.
- Mullins, Michael.
- Naughton, Hildegarde.
- Noone, Catherine.
- O'Keeffe, Susan.
- Sheahan, Tom.
- van Turnhout, Jillian.
- Whelan, John.
- Barrett, Sean D.
- Byrne, Thomas.
- Cullinane, David.
- Daly, Mark.
- Healy Eames, Fidelma.
- MacSharry, Marc.
- Mooney, Paschal.
- Ó Domhnaill, Brian.
- Ó Murchú, Labhrás.
- O'Donovan, Denis.
- Power, Averil.
- Quinn, Feargal.
- Reilly, Kathryn.
- Wilson, Diarmuid.
This is a technicality, as a ministerial order to allow for the transfer of functions obviates the need to specify the particular name.
Amendments Nos. 15 and 71 are related and may be discussed together.
The Bill introduces a separation between the publication date and the effective date. Currently, these dates are one and the same. The separation of the dates allows time for appeals to be heard and minimises losses in rates revenue for local authorities. Both of these amendments are needed to clarify which date is being referred to. The first is an amendment to clarify that it is the publication date specified in section 21(1) of the principal Act that shall not be later than three years after the commissioner makes a valuation order. This removes any ambiguity that may have surrounded the word "date" when used without qualification.
The second amendment is to section 56 of the Act, which section empowers the Minister for the Environment, Community and Local Government to limit the aggregate rates collected in a rating authority area in the year following a revaluation. This is an important power as it assures ratepayers that revaluation is not about increasing rates but rather is about a fairer distribution of the rates burden based on modern valuations. The amendment is a technical change to the definition of "appropriate year" to reflect the change proposed for section 21 of the Act which would allow for a separation of the publication date and the effective date.
The effect of this amendment, which is largely of a technical nature, is to change section 24 of the 2001 Act to allow the valuation manager to amend a valuation certificate by correcting a clerical error, including an electronic error, a function which henceforth had been reserved to the commissioner. This is a practical measure which streamlines the procedures for correction by the valuation manager. In other words, the commissioner's chief operating officer may correct any errors that may occur in the valuation process, including the correction of an error in the valuation of a property. In my view, this is a sensible and streamlining amendment.
Previously, the commissioner made any necessary change. Perhaps the Minister of State might explain further.
Currently, the function of correcting a clerical error is the function of the commissioner. We want to allow the valuation manager to amend the valuation certificate by correcting a clerical error.
Why is this being proposed?
It streamlines the procedures for correction. In other words, it allows the valuation manager to correct an error without having to go back to the commissioner.
I am opposed to this. I would like as many checks and balances as possible.
I agree with Senator Thomas Byrne on this matter. What is being provided is that the valuation manager may correct any error, technical or otherwise. At the end of the day, who would have overall responsibility in this regard? Would it be the valuation manager or the commissioner? We have seen in recent times where an error was made in respect of which the commissioner had to accept responsibility, even though the mistakes, possibly, were made by the valuation manager. If a valuation manager makes a correction, will the buck stop with him or her or will it stop with the commissioner?
I will try to outline the rationale behind this amendment in another way. Currently, there is no provision for the correction of an error prior to publication. For example, if a valuation certificate issued today contained an error and that error was not corrected prior to the publication date, the occupier would not have simple recourse in terms of having that error rectified. We are speaking in this regard of clerical errors which can be amended by the valuation manager rather than having to go through the reserved function of the commissioner. It is a practical measure which speeds up efficiencies and assures occupiers that where errors occur they can be corrected in a speedy manner in advance of a list being published, following which they would have to go through a more complex process.
Ultimately, who would be responsible for the error? Would it be the commissioner or the valuation manager?
I understand the reasoning behind streamlining the activity. Clerical errors occur all the time. The difficulty is the definition of clerical error and whether this presents an opportunity for someone to take advantage and identify a mistake as a clerical error when clearly it is not. The question regarding responsibility is important given the existence of a commissioner. We are probably all ad idem on the spirit of this proposal. What is at issue is how precisely what is proposed would happen. Practicality should be part of this debate.
I understand from where Senator Tom Sheahan is coming in terms of who is to blame. The error has no consequence until the list is published. In other words, if we can fix an error before the list is published, the occupier has not been disadvantaged and the valuation is correct. Obviously, the commissioner and Valuation Office will continue to be responsible for the operation of services. For want of a more parliamentary phrase, the buck will stop with the head honcho. As I said, the error has no consequence until the list is published. What we are trying to do is ensure that where an error occurs it can be amended as quickly and speedily as possible. That is important.
Senator Susan O'Keeffe asked what safeguards were in place. I am satisfied that this legislation, in terms of the safeguards it puts in place around ensuring correction valuations, is robust. It also provides for a valuation tribunal. I am confident that the legislation is robust and that there are enough safeguards in place to ensure that we can stand over the integrity of the system. I think it is important that if an error is made in a valuation that the occupier can be confident that the error can be amended in advance of a list being published.
One of the first things one is taught in law school is that laws are made to correct mischiefs or problems in the law. What is the problem that is being corrected? Have there been many delays as a result of a problem in this area and have people been disadvantaged in that regard? I do not want to be critical of Ministers or officials but it must be remembered that this is a tax we are placing on people. It is a heavy burden on people. While the intention is to ensure things are run better this must be done carefully.
I would like to know what the problem is that is being corrected. Also, what does clerical error mean? There is no definition in this regard in the Bill. I would like to see such a definition included. I wonder about this section.
There are safeguards in the legislation. We agreed to an amendment earlier in relation to allowing the commissioner restrict what can be outsourced and so on. It is important to note that we are not providing that anybody can tamper with a certificate but rather that a valuation officer, who is the person tasked with carrying out a valuation, can do so. We are seeking to provide that where an error is made on a certificate which arrives in an occupier's place of business - the error might be a wrong description of a premises or a numerical error which could have resulted in the actual valuation not being correctly transposed into the valuation certificate - the error can be corrected without having to go back to the commissioner. This legislation is all about speeding up the process and making it more efficient and modern while allowing an element of outsourcing. We are making provision for the correction of an error by the valuation manager. I think I have said all I can at this stage.
The Minister of State has not given any information in regard to what problems have been caused as a result of this provision not existing heretofore.
I have given the example of a wrong description or numerical value.
Does the Minister of State have statistics on how often this happens and the cost in that regard to business?
I will try to get the statistics for the Senator. A practical example would be where an occupier of a building changes between a valuation being carried out and a certificate being issued. In such case the name of the occupier would be wrong, the list would then be published and the process of rectifying that problem would be more complex. We are seeking to provide that where an error is identified, it can be amended at the easiest source possible, namely, the valuation manager. I do not have statistics to hand but will endeavour to get them for the Senator.
I am inclined to agree with the Minister of State that we should be correcting errors at the lowest possible level and the earliest possible opportunity.
There is nothing sinister in the amendment. If it must go through a process right up to the Commissioner of Valuation, it may disadvantage the occupier, particularly if there is an incorrect valuation on it and the local authority is looking for money based on a wrong figure on the valuation certificate. What the Minister of State is trying to do is correct, and all errors in any business should be corrected at the lowest possible level and cost.
I am not saying the Minister of State is wrong, but he has not convinced me. My problem with this legislation in general is that all these little provisions with which we are dealing – I have been alerted to the Schedule which is to be inserted – seem to be reactions to court cases in which the Commissioner of Valuation has lost and the Government is trying to get the provision in through legislation. This is the argument I made in the previous debate we had where we had to vote. I do not know the origin of this and I am wondering; that is all.
I fully accept the Senator’s bona fides in questioning this. As Senator Michael Mullins said, there is nothing sinister in it. The Bill is about modernising our valuation system and, where possible, helping the ratepayer. Thankfully, as my officials inform me, there are very few instances of this. While I do not have statistics to hand, it is not a widespread problem. However, any of us could encounter a situation in our constituencies whereby somebody receives a valuation certificate that is incorrect and under current law there is no recourse for such a person other than to go to the Commissioner of Valuation. We are suggesting a streamlining measure to assist a ratepayer who, as the Senator said, is already paying a tax to the State, in having the error rectified at the lowest possible place, which is the valuation manager.
Amendments Nos. 17 to 19, inclusive, are related and will be discussed together.
Section 10 extends the period of time under section 26(2) of the Act of 2001 in relation to the right of an occupier to make representations on a proposed valuation made under section 19 from 28 days to a proposed 40 days. The section also provides for an amendment to section 26(3) to enable the valuation manager, if he or she thinks it appropriate to do so, to amend the terms of the proposed valuation certificate, regardless of whether or not representation was received.
Amendment No. 17 proposes to amend section 26(2) of the 2001 Act by making specific reference to the proposed value. The objective is to ensure a comprehensive and extensive examination of all material facts can be carried out at the representation stage of the valuation cycle and for the avoidance of any doubt as to whether this can include consideration of the amount of the proposed valuation. The increase from 28 to 40 days of the period during which representations may be lodged is contained in the Bill as initiated. This extension will afford ratepayers a reasonable and longer period in which to consider whether making representations is warranted or to provide them with more time to make their submissions.
It is proposed to amend section 10 of the Bill so as to provide the valuation manager with flexibility to ensure the valuation list published under section 23 is as robust as possible. To achieve this, the following measures are required. Where the valuation manager exercises his or her powers it is also considered necessary that the valuation manager be empowered to ensure subsequent proposed valuation certificates regarding the same property where he or she forms the view that it is appropriate or necessary to amend the original or previous proposed certificates issued. It is also proposed that where the valuation manager considers it necessary to do so, he or she may issue a new proposed valuation certificate arising from the subdivision or amalgamation of relevant properties for which a proposed valuation certificate may or may not have already been issued. For the avoidance of doubt, where the valuation manager considers it necessary, he or she may increase or decrease the valuation of a relevant property.
I have one query on the amendment.
It has already been discussed. The Senator may speak to the section.
Beidh mé gairid. Hypothetically, if a property of 3,000 sq. ft. is subdivided into two commercial units of 1,000 sq. ft. leaving one third unused, would the two properties pay the full rate on the full valuation of the 3,000 sq. ft. unit?
It is a very practical question. In such a case, the rates would be divided three ways. Where the valuation manager considers it necessary to do so, he or she may issue a new proposed valuation certificate arising from the subdivision or amalgamation of relevant properties for which a proposed valuation certificate may or may not already have been issued. The valuation manager has the ability to issue a valuation certificate, whether one has already been issued regarding a subdivision or amalgamation. In the situation the Senator described, where a property is divided in three, three separate valuation certificates would apply. Does that answer the question?
Not really. The valuation manager has the ability to issue a certificate. As I said, the 3,000 sq. ft. unit would be divided into two units which would account for only 2,000 sq. ft. of the former property. Would the total rates on the two properties of 1,000 sq. ft. each be the same as that charged on the 3,000 sq. ft. property?
I wish to be helpful. The valuation will still stand, but will be apportioned to each of the individual units. If 1,000 sq. ft. is not being used, the valuation of it will be assigned to the occupier or owner of it and a valuation certificate will be assigned to each of the other two. If the Senator wants to re-examine it on Report Stage I would be happy to discuss it further with him in the interim.
Yes, I thank the Minister of State.
I move amendment No. 20:
In page 6, between lines 41 and 42, to insert the following:
“11. Section 26 of the Principal Act is hereby amended by the insertion of a new section 26B—
“26B.(1) On application to it, by an occupier, a rating authority shall, in accordance with this section, exempt an occupier from the obligation to pay rates on grounds of hardship or inability to pay where that rating authority is satisfied that reasons of a hardship or economic nature exist which renders it not possible for the occupier to make that payment.
(2) An exemption under subsection (1) shall be for a period not exceeding one year and not less than 3 months.
(3) An occupier may apply in writing to the rating authority for an exemption under subsection (1).
(4) On receiving an application under subsection (3) the rating authority shall give its decision, based on the criteria as set out in subsection (1), in writing to the party concerned as soon as is reasonably practicable.”.”.
We seek an ability to pay clause and I wonder what the Government's position on it is.
This is a rates issue, not a valuation issue. 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 under the Valuation Act 2001. The levying and collection of rates are matters for each local authority. Forfás has concluded that, as property tax, commercial rates should not discriminate between businesses based on performance. As part of a balanced taxation system, other taxes are more appropriately designed to account for business performance, including corporate tax, capital gains tax and labour taxes. The role of the Commissioner of Valuation and this Bill, as distinct from other potential pieces of legislation, is to put a value on a property, which is subsequently used in the calculation of the rates due. The Commissioner of Valuation does not collect rates. This legislation governs the valuation process, not the rates process, and we cannot mix the two in one piece of legislation.
If my amendment were not within the scope of the Bill, it would have been disallowed by the Cathaoirleach.
I reject the argument that it is not relevant because it is not strictly a valuation issue. It is very relevant. The connection between valuation and payment, and the operation of businesses and the ability to make payments based on the valuation is entirely connected. We are proposing a reasonable provision to include some sort of ability to pay clause. I understand there is such a provision in the United Kingdom. Why can we not have one here? Has the Department considered this issue? On the last occasion we discussed it with either the former Minister of State at the Department of Finance, Brian Hayes, MEP, or the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, there was an indication that the issue would be investigated. I understand that the revenue implications need to be carefully considered but this is a serious issue. Rates create a significant cost for businesses and are probably the highest fixed cost after rent. It is possible to renegotiate the rent and reduce staffing and pay costs but businesses cannot change their rates bill. The reality is that many county councils are not collecting rates because people simply cannot pay them. One might think the country is coming out of recession but the unemployment rate is still over 11%. A considerable number of people are struggling and the Government should give serious consideration to this amendment because it responds to a need that I am sure has been expressed to the Minister of State in his constituency clinics.
I appreciate the difficulties that businesses face, which I have observed in my constituency and through my work. However, businesses also have a right to expect local government and that the people we elect in local elections will make decisions which reflect ability to pay. This Government has increased the base of revenue for local authorities. We have seen how councillors have made decisions in recent days about reducing or increasing the property tax. I am pleased that the rate has been reduced in my county. These are the decisions that people have to make in regard to how they want to run their local authorities and fund services. Where the burden should fall, be it on businesses or households, or how it is spread is a matter for local authorities.
The Bill attaches a value to each building. It is up to councillors, in conjunction with the Department of the Environment, Community and Local Government, to consider the rates to be applied. We provide the valuations in a clear manner and in accordance with market rates, taking into context the value of other similar properties in the area. The rate or cost to business is applied by local government. Many fine people serve in local government and it is up to them to make these decisions.
In regard to the ability to pay and the calculation of rates, a supermarket comprising 4,000 sq. ft. with 20 staff, a turnover of €2 million, gross profit of 10% and net profit of 4%, can be levied with a rate of €8,000 per annum. On the other hand, a professional operating out of two rooms with a turnover of €1.5 million per annum might pay €300. I have long argued that the calculation of rates should have a connection to turnover. The turnover should be reflected in the rates. As has been noted, I do not think many of us can give examples of rates being reduced.
A lot of people who would like to get into business are being pushed away by the fixed costs. Last year or the previous year, a county manager showed initiative by reducing the rates in regard to an area of a town with no commercial activity for a period of two years. Businesses which are struggling with increasing bank charges and other expenses should be helped in some way. Previously, some local authorities set rates that reflected businesses' accounts but I understand that the ability to do this has been removed. I do not think that was the best thing to do, but I join my colleague, Senator Thomas Byrne, in asking the Minister of State to consider this issue. It is often the last straw that breaks the camel's back. Many business people are not taking a wage because they want to pay the rates and the water bills, along with everything else. They need to be given some breathing space or a light at the end of the tunnel along the lines of ability to pay.
I support Senator Tom Sheahan. I am not inclined to link rates to turnover because I believe there should be a link between rates and profitability. One could have a high turnover and tight margins. While the Bill deals with the issue of valuations, I hope that valuations reflect the changing situation in towns that have been decimated as a result of the recession or because major multinationals have moved in and sucked the heart and life out of the town centres by establishing large supermarkets on the outskirts. I come from a town which has lost 1,000 industrial jobs in the past seven or eight years. Three major multinationals have located on the outskirts of the town and they sucked life and business out of the centre. Businesses are struggling as a result. I hope that when valuations are carried out in that town, they will reflect the significant reduction in footfall and business.
I agree with the Minister of State that it is a matter for the local authority to decide whether hardship or economic capacity should be taken into consideration. Some local authorities have shown initiative in providing incentives for certain parts of towns to attract new businesses. I hope that continues and that the newly elected local authority members will be more proactive and innovative in how they structure their finances.
I apologise; I had meant to speak about profitability rather than turnover.
I thank the Senators for an interesting debate and exchange on this issue. I am sympathetic to the point being made on all sides of the House regarding the pressures on businesses, which I have observed in my own county. However, the Bill allows us to fix the way in which we value a building and the letting value of that building. Revaluation will go some way towards addressing the issues raised by Senator Mullins. The revaluation process in the towns and villages around the country will take into account the potential lease value of a building. If a town has been decimated during difficult economic times, the revaluation process will assist by establishing a more up-to-date valuation on its buildings. Rates are somewhat linked to profitability for the same reason, albeit indirectly. The letting value of a property is indirectly linked to the potential profit that a tenant or occupier hopes to make from occupying the property. The impact on the letting value is based on the potential for profitability. It is important to note that profitability can vary significantly within and between sectors, such as retail, fuel sales and hospitality.
There are some important points here that must be heard clearly and loudly within local authorities, as they make their decisions in the run-up to their budgets, as well as in the Department of the Environment, Community and Local Government in respect of the commercial rate system as a whole. This legislation is trying to set a value as to how the actual charge is levied and how they arrive at that charge is a matter for local authorities in the first instance.
I am just looking up the Fine Gael local election manifesto, in which I believe there is some reference to ability to pay. However, I cannot find it.
I can send the Senator a copy.
Members are aware of what manifestoes mean.
The Senator has one at home; just not with him.
Serious arguments have been raised in this regard. This amendment has set out clear and restrictive criteria on how to deal with this. It is not good enough to wash one's hands of it and to state that local authorities make such decisions, because they do not. Local authorities depend entirely on funding from central government.
Not any more.
They do. They cannot do anything and even what they could spend the property tax revenue on was set out. The rates are there, but were the local authorities to reduce their rates, there would be nothing left and they would get nothing back from central government. They cannot move and they cannot touch anything. The idea that local authorities are free to tax and spend as they like is completely wrong, as they have various statutory obligations. This is a big issue and is a cost that cannot be changed.
Colleagues here have stated that some local authorities allow this or have something available from which people can benefit. However, this is not the case with all local authorities and no standard exists. This amendment would set the standard and as for the idea that because this Bill is connected to valuation, Members therefore should not discuss this or it is not relevant, had that been the case, it would have been decided on by the Cathaoirleach.
While I do not like to disagree with Senator Thomas Byrne for the sake of disagreement because it all has been far too harmonious, the local property tax changes this structure as local authorities now receive a revenue base from residences within their county or authority area. County and city councillors have a decision to make on whether they wish to keep all of it at the same national rate or to vary it downwards or upwards by anything between 0% and 15% and then they get to make decisions.
A great many people in many parties ran in elections because they wished to have an impact on their communities. While I acknowledge it has been difficult for people to pay, the local property tax now provides local authorities with the ability to make decisions. This decision was made in my native county of Wicklow, which would have been approximately €3 million better off with the property tax this year. However, the county councillors took a decision, which I believe to have been the correct decision, to reduce the property tax rate by 15% and the council will now be only approximately €800,000 better off. Nevertheless, they are still better off. The point I am making is they had decisions to make.
As the Minister of State's colleagues in County Meath refused to do the same, we are stuck with it.
There must be dynamics at play in County Meath.
The difference is that Fine Gael controls Meath County Council, while Fianna Fáil has an influence in the other counties.
There is plenty of money in County Meath.
In recent years, County Meath has been a bastion of support for Fine Gael.
However, to revert to earlier comments, I also make the point to Senator Thomas Byrne that the pie remains the same. In the case of people who make more profit or people who have higher turnover, whichever way one wishes to argue it, there are other taxes. This tax does not occur in isolation and is not a charge in isolation. There is a range of ways in which to tax and-----
If they do not have any income, they will not pay any income tax. If they do not make any profits, they will not pay corporation tax but they must still pay this.
The Government has a range of ways to tax profitability. One could argue that it is taxing some small entrepreneurs too highly. Consequently, I am satisfied that there already is an indirect link to rates in respect of profitability through the issue of leasing value. I am satisfied the revaluation process will address some of the issues raised by Senator Mullins and I am satisfied that local authorities now have a new set of tools they did not have previously with regard to deciding how to spend they resources. However, I take Senator Thomas Byrne's point about an inconsistency in respect of an application. This issue also arose with the non-principal private residence, NPPR, charge and I take the Senator's point that it now is evident with regard to inability to pay. I will raise this matter with my colleague, the Minister for the Environment, Community and Local Government, Deputy Alan Kelly. There should not be an inconsistency in how councils deal with difficult situations and I will engage with my ministerial colleague in this regard.
On that point of the Minister of State being obliged to engage with his colleague, I do not seek to have the civil servants transferred to another Department. However, this should all be under the local government remit and should all be considered as a whole, rather than within the Department of Public Expenditure and Reform. At this stage, I consider it to be an oddity that it is under the remit of the Minister of State's Department. This should be under the aegis of the Department of the Environment, Community and Local Government, where one could look at the overall mix together.
Does the Minister of State wish to respond?
No, I am satisfied that I have said all I can today.
I am sure he is.
I do not think I will please the Senator.
- Barrett, Sean D.
- Byrne, Thomas.
- Cullinane, David.
- MacSharry, Marc.
- Mooney, Paschal.
- Ó Domhnaill, Brian.
- Ó Murchú, Labhrás.
- O'Donovan, Denis.
- Power, Averil.
- Quinn, Feargal.
- Reilly, Kathryn.
- Wilson, Diarmuid.
- Bacik, Ivana.
- Brennan, Terry.
- Burke, Colm.
- Coghlan, Eamonn.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- D'Arcy, Michael.
- Gilroy, John.
- Hayden, Aideen.
- Henry, Imelda.
- Moloney, Marie.
- Mullins, Michael.
- Naughton, Hildegarde.
- Noone, Catherine.
- Sheahan, Tom.
- van Turnhout, Jillian.
- Whelan, John.
Amendments Nos. 21 to 25, inclusive, are related and may be discussed together, by agreement. Is that agreed? Agreed.
I have been led to believe that amendments Nos. 27 to 30, inclusive, are also included in the group.
I do not have that information.
We are now moving to a set of amendments to Part 5A of the Bill, which was originally intended to introduce an element of self-assessment for ratepayers. This is an issue we have already touched on in the debate, particularly the contribution from Senator Tom Sheahan. Before detailing specific amendments, I wish to give some background to the changes proposed for the new Part 5A.
The use of the term "self-assessment" has led to some confusion. Contributors to the debate on this issue have expressed the view that ratepayers in an area that has been revalued would be disadvantaged by not being able to self-assess. The figures I have put on the record earlier indicate that the revaluation process is well under way, with some counties completed. It was never the intention that self-assessment would allow rate payers to determine their own valuation or even be like those who self-assess the local property tax. Valuation for rates purposes is a very different exercise and self-assessment in this context was always going to be within tight guidelines, with the power for the commissioner to ultimately determine that valuation before it became effective. Consultations by the Valuation Office confirmed the view that enforcement of a self-assessment regime requires considerable powers and ability to levy and collect surcharges and financial penalties.
The role of the Valuation Office is to assess liability but not collect any element of the rates or related surcharges. Accordingly, a number of practical difficulties with the operation of this part, as originally drafted, were identified in earlier stages of this debate and are now being addressed by Committee Stage amendments.
To avoid confusion, it is proposed to amend the heading of this part of the Bill and refer to occupier assisted valuation in future as this term more accurately reflects what will happen in practice where the Valuation Office may request occupiers to assess the valuation of their properties. To facilitate this, the Valuation Office will provide them with indicative valuation levels based on market evidence available to the office. Rate payers can propose a different value but it will be examined for correctness by the Valuation Office and an alternative valuation can be proposed by the commissioner, if necessary.
The Bill, as amended, will now give occupiers who provide valuations of their own properties the right to make representations where the valuations they submit are not accepted. This is a right occupiers did not have in the Bill, as published, and, as I previously suggested, it is important that we afford occupiers the opportunity to engage in the more informal element of the appeals process, the representation stage, before taking the formal route of an appeal. Such a participative approach has the potential to speed up the overall valuation process. The amendments provide for the Minister to make regulations for rate payers to undertake certain functions leading to the assessment of the valuation of the premises they own or occupy, as the case may be. The amendments also provide that the commissioner or his officer may make inquiries or seek information or records at any time to satisfy himself or herself as to the accuracy of a valuation submitted by an occupier of a property. The officer may then enter the valuation provided on a valuation list or substitute a valuation of his or her own.
When an occupier fails to submit a valuation under this section, the valuation manager may determine the valuation of the relevant property and enter it on the valuation list. This is important to note. The Valuation Office is not in the business of collecting surcharges or imposing financial penalties when it is possible to avoid them but we must ensure every property has a valuation attached to it.
Amendment No. 21 simply substitutes the word "estimates" for the word "assesses" as it is considered a more accurate term that is more in line with the terminology used throughout the Bill and principal Act. Amendment No. 22 provides that the regulations for occupier assisted valuations will now be made by the Minister, rather than the commissioner, as was originally envisaged in the Bill, as published. Amendment No. 23 means that regulations may cover the valuation or some of the steps comprising a valuation. Amendment No. 24 is a minor technical change to the wording. Amendments Nos. 25 and 27 provide for the extension of deadlines where material is submitted online or electronically. Amendment No. 28 makes provision to restrict occupier assisted valuations to certain components of a valuation. For example, this might mean the exclusion of particular types of specialised properties or categories of property. Amendment No. 29 means that regulations made by the Minister may be specific to certain components of a valuation. Amendment No. 30 provides that a published valuation list may include a combination of properties that were subject to direct assessment by the valuation manager and occupier assisted valuation by the occupier.
On occupier assisted valuation, where is the amendment to the title of Part 5A? Is it described as self-assessment? I cannot see it.
The Bills Office will amend the title in the consolidated Bill after Committee Stage.
The Minister of State has said what it will be called but where has this been inserted?
I am informed that one does not change the name of a sub-part of a Bill on Committee Stage.
I cannot see how the Minister of State can decide to change the nature of the legislation without a vote. When this was published in the summer of 2012, it was welcomed as the Minster for Public Expenditure and Reform, Deputy Brendan Howlin, said this Bill "will also provide the legislative basis for carrying out a revaluation based on self-assessment". He did not say anything about occupier assisted valuation. It seems the Government has rowed back on this and I cannot see how it is alluded to in the amendments.
I said we will refer in future to occupier assisted valuation as this term more accurately describes what will happen in practice. The Senator has correctly quoted the Minister for Public Expediture and Reform, Deputy Brendan Howlin, on Second Stage but we are trying to introduce a balanced system whereby the occupier can provide more information to the Valuation Office or provide an alternative valuation. This system will allow the Valuation Office to ask the occupier to provide information. I recognise that this is more complex than the system of self-assessment for local property tax - we have already discussed how a value is arrived at and it is a more complex process. However, under this system an occupier will be able to submit an alternative valuation to the Valuation Office and provide information. For example, an occupier may have information that the Valuation Office does not have relating to a change of floor size or other changes to a building. There is an element of people providing information but this must happen within a structure. This is why the term "occupier assisted valuation" will prevent people in other counties, whose property has already been revalued, having concerns about missing out. Everyone will be revalued on the same basis of an occupier assisted valuation wherein the occupier can provide information, feed into the process and inform the Valuation Office of certain things. Obviously, the scheme must operate within the guidelines laid down by the Valuation Office.
I think the Minister of State has pulled the rug from under everyone on this Bill. It seems a whole new approach has been taken that is completely different from what was announced two years ago. This is unfortunate as the argument on Second Stage was that self-assessment would not happen all at once around the country. Rather, it was argued that it would happen only in certain counties and we argued that it should happen nationwide. Now it seems that the process will only be to provide assistance to the Valuation Office - that is a big change.
I do not agree with the assertion that this is markedly different. There was always an intention that the rate payer could provide his or her own valuation to the Valuation Office and this remains the case. I am trying to be clear that there is a situation where the Valuation Office will have to assess a valuation - it need not accept a valuation that is provided. This system is more complex than that applying to local property tax. I do not accept that a rug has been pulled as the substance of this has not markedly changed. We are trying to bring clarity on what we hope to achieve and how it will work.
The section was initially very simple. It said the commissioner "may make regulations providing for the carrying out of the valuation of relevant properties". This has now changed to "the Minister may make regulations providing for the carrying out of the valuation or the taking of one or more of the steps that comprise such valuation". This is a massive change that goes against what the Minister, Deputy Howlin, announced two years ago. We gave our support to this section and it was argued that it would not spread throughout the country all at once. I think the plan was to have a test county and then apply it on a county by county basis. This is a huge change and I appeal to my colleagues in Fine Gael to raise this matter with their parliamentary party. The Minister has changed the name from self-assessment to occupier assisted valuation and some of these amendments make radical changes that completely alter the face of this legislation. If the Opposition tabled such amendments, they would be ruled out of order.
With the greatest respect, I would not trust myself to put forward my self-assessment on rates as I know what it would amount to. The Senator is bringing the war into this House. It was always intended that the occupier would have more input in the process, as was the case in earlier sections. Profitability, turnover, ability to pay and economic developments on one or other side of town are all factors that play a part in a valuation. I would love the opportunity to perform a self-assessment but we must be realistic.