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Commercial Rates Calculations

Dáil Éireann Debate, Tuesday - 18 September 2012

Tuesday, 18 September 2012

Questions (59, 1105)

Brendan Griffin

Question:

59. Deputy Brendan Griffin asked the Minister for the Environment, Community and Local Government his views on the current method of commercial rate calculation for small and medium sized enterprises; if he considers the current method to be outdated; if he will consider the introduction of a system, administered by the Revenue Commissioners, which would reflect the performance of the enterprise rather than the rental value of the premises; his views on whether such a system would be pro-enterprise and jobs and would also reduce disincentives to occupying vacant commercial units by providing a safeguard to business owners; and if he will make a statement on the matter. [38264/12]

View answer

Simon Harris

Question:

1105. Deputy Simon Harris asked the Minister for the Environment, Community and Local Government if he intends to reform the system of commercial rates levied on businesses and paid to local authorities; if he will consider some form of inability to pay clause being introduced into the rates system; and if he will make a statement on the matter. [38848/12]

View answer

Written answers

I propose to take Questions Nos. 59 and 1105 together.

I have no immediate plans to amend the legislation governing commercial rates. 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 Commissioner for Valuation has sole responsibility for all valuation matters including the most appropriate method of valuation. The levying and collection of rates are matters for each individual local authority.

It is important to acknowledge that commercial rates, as a local tax, and the rating system generally are deeply embedded in the local government system. A large body of case law is well established and local authorities and ratepayers are, in the main, very familiar with, and generally accepting of, the operation and practice of the rating system. Rates are also a stable source of financing for local government which is not affected unduly by short-term changes in economic circumstances.

A property-based tax such as rates has a distinct advantage over any tax based on profits or incomes as it is generally found to be easy to collect and difficult to evade. A system having regard to economic factors on an ongoing basis would create uncertainty by providing for continuous change to the valuation base. Such a system would not provide a stable basis for funding local government and would require significant additional resources to operate.

In relation to the suggestion of a disincentive to the occupation of vacant premises, I can confirm that under rating legislation, the person liable for payment of rates is the person in occupation of a rateable property on the date of the making of the rate by the relevant local authority. The owner, rather than the occupier, may be liable for commercial rates if the property in question is unoccupied on the date of the making of the rate. Should a person’s occupancy commence after the date of the making of the rate, then that person is not primarily liable for rates for that year. However, as a subsequent occupier, that person can be held liable for up to two years arrears of rates if they cannot be recovered from the person with whom the primary liability lies. However, an owner of a vacant premises is entitled to a refund if the property is vacant for specified purposes. These are where the premises are unoccupied for the purpose of the execution of additions, alterations or repairs; where the owner is bona fide unable to obtain a suitable tenant at a reasonable rent; and where the premises are vacant pending redevelopment.

Commercial rates income makes a significant contribution to the current funding requirements of local authorities. Rates provide the means by which local authorities can support the services essential to communities, and therefore business, across the full range of local activities including roads, water and waste services, fire and emergency, libraries and a range of community, amenity and social activities. I am committed to continuing to impress on local authorities the need to maintain and enhance efficiency measures with a view to minimising rates and other charges to business.

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