I thank Deputies on all sides for what has been a very constructive debate. A number of common themes have emerged. It is important to say, in the interests of honesty and bluntness, that not all the issues raised today can be resolved by a valuation Bill. This is a valuation Bill; it is not a magic wand. I acknowledged in my opening contribution that we had a really good engagement in the Seanad. I am not afraid to say that some very good ideas came from the Opposition. I engaged extensively with Senator Thomas Byrne and he engaged with my officials. We had discussions with the Irish Hotels Federation, the Society of Chartered Surveyors, the Sinn Féin Party and the Independents, and had a very good debate in the Seanad. As a result of that, the Bill I am bringing before the House is a substantially better Bill than when it was published. Deputies who say it has taken a long time to get to this point are right.
However, they must acknowledge it is the first national revaluation programme in 150 years. If one is blaming this Government for taking two years to get to this point with a better Bill than first published, one needs to put it in perspective. As a result of the Bill going through the Seanad we have a better scenario for sports clubs and child care, and I will deal with those for profit in a moment, and a better scenario for addressing the concerns of a number of industry bodies.
Unfortunately, I was not in the House for Deputy Spring's contribution but I heard some of it. He and others raised issues which go beyond the Bill, and as a constituency Deputy I certainly see merit in many of the points raised with regard to how to fund local government, where we go, what is the next step and whether we can further modernise the system of rates, but all of these issues cannot be answered in the Valuation (Amendment) (No. 2) Bill 2012. Its job is to modernise the valuation system and give people an opportunity to have, as quickly as possible in an expeditious manner, a fair valuation system and uniformity throughout society and counties.
I noted some comments that the Government only cares for foreign direct investment, and while it is very important and often used as an abstract concept, it employs 150,000 people in the country. The international financial services sector has 35,000 jobs, 10,000 of which are outside of Dublin. Foreign direct investment is important and I know Deputies opposite appreciate this. Two thirds of the new jobs created last year were created by small and medium enterprises. We have more to do for small and medium enterprises, but if one looks at the establishment of the local enterprise offices, which have acted as one-stop shops, JobsPlus, which incentivises through cash the creation of new jobs in communities, and the regional enterprise strategy announced yesterday, one can see a significant pool of supports, but we need to continue to engage on this.
The Bill before us today is quite technical and often complex, as valuation law tends to be. Its core objective is, however, simple. It is to accelerate the revaluation process. I have outlined the measures in the Bill which will help to achieve this acceleration, which are outsourcing, occupier-assisted valuation, the use of computer-aided techniques and aggregated data and the streamlining of the appeals process. The Bill does not make fundamental changes to the valuation or rating systems and, as I outlined, it is not intended to do so.
Rates are based on the rental values of property and provide an important and stable source of revenue for local authorities and predictable liabilities for ratepayers. The system must be fair and equitable. Changes made in the Bill make more explicit and transparent the criteria to be considered in determining valuations. While this legislative change is important for the understanding and smooth functioning of the system, it is the completion of the national revaluation programme which translates the theory into practice. To look at some of the areas already completed, so there is no sense of scaremongering, in Limerick 65% of ratepayers saw a reduced rates liability, 32% an increased rates liability and 4% were not previously rated. In Waterford, 65% of people saw a reduced rates liability, 32% an increased rates liability and 2% were not previously rated. People do not have anything to fear from this process. It is about revaluing as quickly as possible so there is fairness and stability in the system.
As I have outlined, this will be the first full national revaluation programme in more than 150 years and, crucially, it will put rating authorities on a regular five to ten year revaluation cycle. I agree with the Deputies who stated they would rather see it closer to five years than ten years. This must be the aspiration. This ongoing five to ten year revaluation cycle will represent a radical change for the valuation and rating systems. It will mean valuations and rates are much more relevant to modern realities and it will mean the system is seen in a different and, I dare say, fairer light.
I do not agree fully with Deputy Fleming's contention that the rates system is not fit for purpose. I have looked at this extensively in recent months as, I am sure, has the Deputy. I heard Deputy Troy, and I accept he wants to replace the rates system with something else, but when one examines what to replace it with one sees it is quite a complex question and it is not as easy as it seems. I am sure we will engage on this on Committee Stage. The system we have in this country, with minor variations, is operational in England, Wales, Scotland, Northern Ireland, Canada, Australia and elsewhere. The key point is that it is based on the occupation of the property and what a hypothetical tenant would be prepared to pay to rent the property. The unfairness is in the slowness of getting to the point of revaluation, and the fact one could end up paying a rate based on a valuation which is out of date because, as Deputy Fleming correctly stated, it takes too long to revalue.
Deputy Fleming made reference to other forms of taxation where business performance is specifically taken into account. This is because these modes of taxation are fundamentally different from commercial rates. In listing these taxes, the Deputy omitted reference to stamp duty, which is a transactional tax based on the value of a property and which is calculated without reference to how a business may be performing or what background debt the vendor may carry. Likewise, the valuations for commercial rate purposes are based on observing the market and assessing what the property might command on the open rental market at a particular point in time.
In its 2009 report, the Commission on Taxation considered the importance of commercial rates to local authority funding. The report stated: "We believe the current system of raising local authority finance from commercial rates works reasonably well, despite an outdated basis for valuing commercial properties." The last part is what we need to try to fix and have a more efficient, modern and fit for purpose system. The report recommended:
The revaluation initiative should be expedited to ensure that a transparent nationwide valuation system, including a cost-effective route of appeal, is in place as soon as possible. Regular revaluations should be carried out thereafter, in order to ensure that the valuation base remains up-to-date. This should be done as provided for in legislation, at intervals of not more than 10 years.
The express purpose of the Bill is to give effect to the issues set out in the 2009 report.
Deputy Fleming also made reference to the online services available to taxpayers through the Revenue online service, which is a very good example of electronic government in action. Another excellent example of this is the range of online services available to ratepayers through the Valuation Office's website. Anybody who has used the site will be aware of the full range of services available which, in my view, are second to none, particularly the online map. It is important in terms of ease of reference and transparency in the system.
A number of Deputies made the case for the greater use of self-assessment, as it works well for other charges and other taxes. This was also discussed in the other House. As I stated in my opening speech, the Bill will introduce a form of self-assessment. It will introduce much more self-assessment than exists, which will be known as occupier-assisted valuation. This is an extra tool which will not only enable the ratepayer to be more involved in the process but will accelerate and assist in helping to speed up the revaluation programme.
I do not agree the valuation for rates purposes is a simple exercise, nor that I have been captured and told everything is too complex nor that this is a system that lends itself to self-assessment in the same way as the local property tax. As Deputies are aware, the valuation determines the slice of the rates burden one will pay. If a group of occupiers of property undervalue their properties, those who will pay are the ratepayers who correctly value their property. There is a knock-on effect as the pie remains the same. A move to a system which has these implications must be introduced very carefully.
Deputies Fleming and Wallace suggested simply using a percentage of rent. On a theoretical level, the valuation system is very close to this view, as rental values are key to the determination of valuations. What they suggested might work in a simplified world, but rents are not always simple. There are incentives for tenants, including rate-free introductory periods and rent holidays, and these are provided for in section 48, which dictates how values are determined. In addition, not every ratepayer is a tenant and not every valuation can therefore be based on rent. The Valuation Office must use other methods, including receipts, expenditure and the contractors method, which looks at the cost of replacing the building. The element of self-assessment now being introduced will contribute to the completion of revaluation, and in time I expect it to become a larger part of the system which will be very much welcomed by ratepayers and business organisations as a progressive step forward.
Deputies Fleming, Stanley and Fitzmaurice spoke about the incentives to revitalise town centres, including incentives based on refunds of rates. They made the point the system is overly complex and that a grant system should be introduced rather than giving a rates reduction. I was interested to hear of Deputy Fleming's experience in County Laois, and I look forward to learning more about it. I, as I am sure do all Members of the House, applaud local authorities who take initiatives in this area and I have sympathy with regard to the complications imposed upon them, but what we are discussing here is valuation legislation and not rates legislation which governs the collection of rates, and there is a difference. There is no doubt they are interconnected and interdependent, but there is a difference. I am bringing a valuations Bill through the Oireachtas as quickly as possible in the interests of ratepayers.
Introducing rate-free periods in rural or other areas, as suggested by Deputy Wallace, has implications for local government funding in these areas and this cannot be ignored. Levelling the playing field, whether referring to locations or sectors, is a key output of revaluation. I suggest in a constructive sense that it is the job of local authorities and those elected to them to play their part at local level, and I am encouraged to hear this is happening in Laois. We need to see more initiatives in all our local authorities.
Reference was made to the merger of various organisations into Tailte Éireann, and that this is causing a delay in the revaluation programme.
The position is that in line with this Government's policy of rationalising the number of State agencies, we are proceeding with merger of the Valuation Office, the Property Registration Authority and Ordnance Survey Ireland, and a new organisation, known as Tailte Éireann, will be established by legislation. Significant progress has been made in bringing this merger about, and the Minister for Justice and Equality has recently announced the draft legislation through which the new body will be established. Under the general scheme announced by the Minister, Deputy Fitzgerald, it is not envisaged that the establishment of this new body will have any delaying effect on the national revaluation programme. On the contrary, Part 5 of the general scheme of the Bill provides specifically for the retention of the statutory office of Commissioner of Valuation, which shall be independent in exercising the functions ascribed to him or her under the Valuation Act. Accordingly, the establishment of Tailte Éireann will result in continuity of operations in regard to the national revaluation programme.
We also had a discussion during the debate on Second Stage here about a new discretion that is being introduced where there is no material change of circumstances. I argue this is a very positive change to the existing Valuation Act and will allow the commissioner to correct serious anomalies between revaluations. Deputy Fleming has a view that this should be mandatory as the commissioner would not give this discretion the priority it deserves, but I can assure him I do not believe that to be the case. The Valuation Office completed more than 22,000 revisions since 2011 in parallel with its work on the revaluation. The new discretion is welcomed by the commissioner who has always had an overriding concern in ensuring that the valuation list is equitable and uniform, and this new discretion will not be low on that list of priorities.
The ability of the valuation and rates system to respond to changing economic circumstances was raised by a number of Deputies on all sides of this House. The acceleration of the revaluation programme has the same ultimate objective. Prior to the initiation of the revaluation programme, the system was very unresponsive and our aim is to get all local authority areas valued for the first time and, crucially, to get them on to the regular five to ten-year cycle provided for in the Valuation Act 2001. This will represent a sea change for the valuation system and, ultimately, those revaluations - I would share the Deputies views' on this - should be closer to five years rather than ten years.
Many Deputies welcomed the positives in this legislation, including the new exemptions for sports clubs and not-for-profit child care providers, and I acknowledge those contributions. I would also like to outline how the Government arrived at a position in regard to not-for-profit child care providers versus other child care providers. I share Deputy Troy's view that the issue of child care is a major one that needs to be addressed. I acknowledge the work done by my colleague, the Minister for Children and Youth Affairs, and the new intergovernmental committee that will examine this area and report to him before the summer, as I recall. Valuation legislation can only go so far. For every single ratepayer, be it a body or business, we exempt, somebody else has to pay. The pie stays the same. The criterion I have applied is that if one is established for the purpose of making a profit, it is not my job to determine which business profit, business motivation or line of business is more societally worthy than another. It is not my job to decide that the butcher who has set up to make a profit should pay extra rates for the child care provider who has set up for a profit. If one has set up to make a profit, one is rateable. That is the current position. I do not envisage that changing, certainly not in this legislation. The provision in respect of not-for-profit child care providers will exempt about 1,000 not-for-profit child care providers throughout the country and will also bring consistency, as there had been an inconsistency in terms of how that had been applied.
I am keen, as I am sure are many Deputies on all sides of the House, that this legislation is enacted without much further delay. I very much look forward to robust debates on Committee and Report Stages, but it is important, as Members have acknowledged, that we ultimately get this legislation passed. Once the legislation is enacted, the Valuation Office is ready to set the wheels in motion on the pilot outsourcing and the occupier-assisted valuations. I can inform the House that the necessary regulations on occupier-assisted valuations are already at an advanced stage of drafting.
I want to refer to one other issue that came up during the debate, that of subsequent occupiers' rates liability. While it is a rates issue, it is important to point out, and there did not seem to be a recognition of this from a number of speakers, that this was already addressed last year by the Local Government Reform Act 2014. That legislation was enacted in January 2014 and it 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, and this is important, the 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, no less, and deleting section 19 of the Poor Relief (Ireland) Act 1849, the effect of which was to remove the liability that was placed on new occupiers of properties for up to two years of outstanding rates of the previous occupier. This repeal took effect from 24 March 2014. Therefore, people can now occupy premises that have been vacant and benefit from that provision which took effect from 24 March last year.
I thank Members on all sides of the House for the input. I believe this Bill modernises the valuation system. It is not a magic wand; it is just one part of the toolkit that we need to put in place to make sure that we have a modern and fit-for-purpose system for how the State interacts with the business community. I look forward to Committee Stage and to considering any amendments Members may wish to put forward on that Stage. I commend the Bill to the House.
