Dáil Éireann Debate, Wednesday - 22 January 2025
724. Deputy Michael Cahill asked the Minister for Housing, Local Government and Heritage to examine the massive increase in commercial rates whereby, in a large number of cases, they have doubled, trebled and quadrupled; and if he will make a statement on the matter. [46649/24]
View answer731. Deputy Michael Cahill asked the Minister for Housing, Local Government and Heritage if he will request the Valuations Office to reinstate commercial rates levels for businesses that have doubled, trebled and quadrupled, to pre-Covid levels (details supplied); and if he will make a statement on the matter. [46704/24]
View answerI propose to take Questions Nos. 724 and 731 together.
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 Tailte Éireann under the Valuation Acts 2001 to 2020.
The amount of rates liable on a property is determined by multiplying the valuation of the property set by Tailte Éireann by the Annual Rate on Valuation (ARV) set by the local authority. The ARV is decided by the elected members of each local authority in their annual budget and its determination is a reserved function of a local authority. I have no role in this regard.
Commercial rates income makes a significant contribution to the funding of local government, providing between 13% and 45% of total funding for local services at individual local authority level, averaging 25% nationally. Rates income is a very important contribution to the cost of services provided by local authorities such as roads, footpaths, the public realm, litter management, public lighting, development control, parks and open spaces; all essential elements to create the environment in which businesses can prosper.
The Government has previously encouraged local authorities to show restraint in terms of ARV increases, in order to support local businesses, and local authority members have generally responded very positively. Data from local authority Annual Financial Statements confirms cumulative increases in ARVs have remained significantly below the cumulative Consumer Price Index inflation rate in recent years. Nevertheless, local authorities are fully aware of the challenges facing many ratepayers and work with ratepayers to agree flexible payment options that reflect capacity to pay.
The national programme of revaluation undertaken by Tailte Éireann is to provide consistent, up-to-date valuations so that rates are equitably distributed. Revaluation results in a redistribution of the commercial rates liability between ratepayers. While an individual occupier’s rates liability may increase or decrease, the revaluation will not increase the overall commercial rates income of the local authority. It is not the purpose of a revaluation to increase the commercial rates collected.
Where the rates liability has increased by multiples of the original bill, my Department has been informed that, while such increases may have occurred in isolated cases, increases of this level would be a rarity. The possible reason for significant increases include valuation of some of these properties had not been revised to take account of improvements, extensions etc. for some considerable time, or where the valuations were historically low in comparison with the general level of valuations on the valuation list. Additionally, some properties may have undergone extensive refurbishment that was not reflected in the valuation before the revaluation.
After a revaluation of a local authority area, the Minister is required to make a Rates Limitation Order (RLO) to ensure that the overall rates collected in that area for the following year does not increase beyond normal inflation and buoyancy to take account of new valuations. RLOs have been made for each of the 29 local authorities that have undergone a revaluation to date.
At all stages of the process, ratepayers are consulted and informed and can bring relevant information to bear on the valuation. Ultimately, ratepayers have a right of appeal to the Valuation Tribunal. In terms of revaluations to date, I understand that the trend is that approximately 60% of ratepayers have experienced a decrease.
The Government recognised the need to modernise the collection of commercial rates and the Local Government Rates and Other Matters Act 2019 was passed by the Oireachtas and enacted on 11 July 2019. Local authorities are levying and collecting rates under the new legal rates framework since 1 January 2024.
The Act contains provisions to add to the suite of options already available to local authorities to support local businesses and ratepayers. These include new rates vacancy abatement and rates waiver schemes, to be decided by local authority members. The vacancy abatement scheme allows the local authority scope for targeted policies in respect of vacant commercial properties. Consideration can be given to the prevailing local economic environment and prevalence of commercial vacancy. Vacancy abatement schemes may be tailored to particular towns, zones within towns, types, or categories of vacant property or circumstances of the vacant property ratepayer.
The rates waiver scheme provides for local authorities to make schemes to support local and national policy objectives, by waiving the paying of commercial rates in certain circumstances. It is open for a local authority to design a waiver scheme as long as it supports county development plans, local area plans, local economic and community plans and the national planning framework.
