Written Answers Nos. 66-68
66. Deputy Ciarán Lynch asked the Minister for Public Expenditure and Reform if he will respond to concerns raised in correspondence (details supplied) regarding the Valuation (Amendment) (No. 2) Bill 2012; and if he will make a statement on the matter. [45557/14]
View answerIn addressing the two main issues which have been highlighted in the correspondence to which the Deputy refers, the following is the position regarding the proposition that economic factors should be taken into account when valuing real property for rating purposes and the requirement for regular revaluations.
Firstly, the Valuation Act, 2001 currently provides for the rateable valuation of relevant properties within a rating authority area to be reviewed periodically to reflect changes in value arising from economic factors. The resultant valuations are all published on the same date and become effective for rating purposes at the same time. This process of revaluation is provided for under section 19 of the Act. If there are changes in rents between revaluation dates then this may be reflective of a general downward movement in rents. If all rents that were reduced resulted in changes on the valuation list then this would not necessarily result in a reduction in rates. This is because the amount of rates collected is a function of the Annual Rate on Valuation set by the Local Authority multiplied by the valuation of a property on the valuation list. Valuations could go down but the ARV would increase and there may be no change to the rates amount due. The revaluation of all properties in a rating authority area takes place no sooner than 5 years and no later than 10 years after the first revaluation has taken place. For example the next revaluation of south Dublin will be completed before the end of 2017. This is also the standard model in other jurisdictions with an annual property charge similar to rates and is provided for in section 25 of the Act. As regards the assumption about delays underlying the concerns raised with the Deputy, I have no reason to believe at this stage that the revaluations will not be completed on time.
A separate process called revision of valuation provides for the value of an individual property to be amended or revised where a "material change of circumstances" has occurred in relation to the property. Such a revision may only take account of purely structural alterations to a property or the subdivision of a property into two or more separate properties or the amalgamation of a property with one or more other rateable properties. A review of valuation of an individual property arising from a change in economic circumstances would not be in keeping with the principles of valuation of real property in this or indeed in other jurisdictions which have a developed code of property valuation.
Any alternative would introduce significant volatility into the rating system, which yields in the region of €1.3bn annually in funding to local authorities, would further delay the national revaluation programme, would be very challenging to implement and would more than likely result in the introduction of an economic valuation system no longer based on property valuations but would become a type of economic audit of the business sector totally unsuitable for application as a base for local government funding. There must be an appropriate balance between the costs of rates for SMEs and the availability of adequate levels of funding to local authorities for the provision of essential local services enjoyed by SMEs and others.
It is imperative to maintain certainty and predictability for ratepayers, local authorities and other stakeholders between revaluations which is a fundamental principle of the rating system. Fluctuations in the economic performance of a company or other entity in occupation of a property would not be measurable in a real estate context and would prove impossible to implement in a fair and equitable way. The physical characteristics and features of a property are the only criteria that can be surveyed and quantified and which form a uniform basis for rates. The use of economic factors such as business values and buoyancy may be used for the assessment of other taxes such as VAT and corporate taxes but are not considered to be suitable as a basis for a local property tax.
However, I accept there may be limited circumstances where, because of the restrictive nature of the "material change of circumstances" provisions in the 2001 Act, it may be appropriate to amend a valuation, e.g. where an error occurred, or where a property has been adversely affected by infrastructural development in its vicinity and where the overarching valuation principles of equity and uniformity would ordain that such a revision should be carried out. Should such an eventuality occur, there is now, for the first time, provision in the Valuation (Amendment) (No.2) Bill, 2012 for the Commissioner of Valuation to address such anomalies. This measure, introduced in response to submissions made by stakeholders during the consultation process, has been roundly welcomed.
The Bill, which was initiated in the Seanad, recently passed Report and Final Stages in that House and will now proceed to the Dáil for its consideration.
67. Deputy Barry Cowen asked the Minister for Public Expenditure and Reform if he will provide details of the commercial rates liability of semi-State companies; and if he will make a statement on the matter. [45402/14]
View answerThe basis of rateable valuation for all building property, including property occupied by semi State Companies both in the commercial and non-commercial sectors, is net annual value and is set out in Part 11 of the Valuation Act, 2001. Net annual value is the rental for which one year with another, the building might, in its actual state, be reasonably expected to let from year to year, on the assumption that the probable average annual cost of repairs, insurance and other expenses (if any) that would be necessary to maintain the property in that state, and all rates and other taxes and charges (if any) payable by or under any enactment in respect of the property, are borne by the tenant of the property
Various methodologies may be used in estimating the net annual value (NAV/rental value) of a building. The most common methodology used is the comparative method which as the name implies employs direct comparison with other similar buildings in the same rating area.
In the absence of direct comparative evidence of value two other methods may be used. The first of these is what is known as the receipts and expenditure method of valuation where trading accounts are analysed to arrive at the surplus available for rent and rates. Another method of valuation used from time to time depending on the particular circumstances and type of building involved is the contractor's method. This relies on the notional cost of constructing a building and the rental of that building will be related to the annual equivalent of the cost of construction, allowing for depreciation as appropriate, and the value of the site is used to arrive at the net annual value.
There is also provision in the Act to allow for the valuation of buildings occupied by a public utility undertaking, e.g. an electricity or telecommunication company, to be valued on a global basis, whereby the valuation of all buildings are not valued on an individual basis but are taken as a whole on a nationwide basis and the valuation thus produced is known as a global valuation.
As the Deputy is aware, the levying of rates is a matter for local authorities and the amount of rates to be collected from a rated occupier whether a semi State company or otherwise is a function of the Annual Rate on Valuation or ARV set by each local authority, and the value of a property on the valuation list.
68. Deputy Lucinda Creighton asked the Minister for Public Expenditure and Reform if he will provide in tabular form, the dates of meetings of his Department's Management Advisory Council in 2011, 2012, 2013 and to date in 2014; the civil servants present at each of these meetings; if he or his Department's Minister of State was present at each of these meetings; and if he will make a statement on the matter. [45482/14]
View answerIn response to the Deputy's question all details regarding meetings of the Management Advisory Council in my Department are currently available on our website at: www.per.gov.ie. This information includes a list of those who attended, the agenda and minutes taken at each meeting since the formation of my Department.
