Dáil Éireann Debate, Tuesday - 8 May 2018
29. Deputy Bobby Aylward asked the Minister for Housing, Planning and Local Government the measures being taken to ensure that small and medium enterprises are not adversely affected by commercial rate revaluations; and if he will make a statement on the matter. [19855/18]
Amharc ar fhreagraLocal authorities are under a statutory obligation to levy rates in respect of 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 Acts 2001 to 2015. The Commissioner of Valuation has responsibility for valuation matters, including the revaluation of properties, and is independent in the performance of his functions under the Acts. The levying and collection of rates are matters for each individual local authority.
The Valuation Acts provide for the revaluation of all rateable property within a rating authority area so as to reflect changes in value due to economic factors such as business turnover, differential movements in property values or other external factors and changes in the local business environment.
It is not the purpose of a revaluation to increase the total amount of commercial rates collected by local authorities. Indeed, section 56 of the Valuation Acts 2001 to 2015 provides that the Minister for Housing, Planning and Local Government, having obtained the consent of the Minister for Public Expenditure and Reform, is obliged to make an order directing a rating authority to limit the overall amount of income it could raise through rates in the year following a revaluation to the total amount of rates liable to be paid to it in the previous year, plus buoyancy arising from valuations determined in the year of a revaluation of newly constructed property, and adjusted for inflation as measured by the consumer price index. Rate limitation orders have been made in each of the local authorities in whose areas revaluation exercises have been carried out up to now and further orders will be made in respect of future revaluations as they arise.
This is a major issue. The dramatic increase in commercial rates is crippling SMEs across the country. Our small independent businesses are the backbone of the economy and we need to encourage SMEs to grow and expand in order to create jobs, especially in the regions. We must take urgent action on this issue. The Minister recently stated to me in the Dáil that the commercial rates Bill is currently being drafted. What is the status of this legislation, given we need to get it published as soon as possible?
Fianna Fáil previously introduced a Bill in the Dail proposing that the level of increase being levelled on an individual business be capped. We also proposed that any increase should be allowed to be staggered over a five-year period at the discretion of the local authority. This would mean an increase is limited and spread over time, rather than the current process involving a single increase. There is also a clear need for reform of the appeals mechanism for businesses to local authorities to restructure debt repayments on the basis of inability to pay. The Government should also consider offering a choice of direct debit payments rather than two tranches of payments in order to help businesses cope with cash flow issues. Turnover and square metreage should be considered. Will the Minister consider these proposals as the drafting of the commercial rates Bill continues within his Department?
I thank the Deputy. On the valuation process, as this happened in my local authority area, I know there are, generally speaking, more winners than losers when this occurs in terms of people seeing their rateable valuation decrease rather than increase. It is roughly a 65-35 split, so some 65% will find themselves paying less as a result. In some local authority areas, as the Deputy knows, this work has not been done in a very long time and it is a question of ensuring that there is fairness across the system in order that some people are not carrying a historic burden in meeting the rates needs of local authorities. This is very important work. If someone feels that a mistake has been made in the process, there is an appeals mechanism they can follow which is independent of me, as Minister, and my office.
I raised the rates Bill with the Attorney General last week and I raised it with him again today. It is priority legislation for us and as it will not be going to pre-legislative scrutiny, once we have it drafted and ready to go we can bring it straight into the Dáil. I had hoped it would be published later this month but more than likely, it will be the beginning of next month. It is a very important Bill that will give greater enforcement powers to local authorities and allow them to achieve what the Deputy wants them to achieve, which is to be able to bring in rates alleviation measures and to recognise where certain areas need a bit more help to come up, for whatever reason, by reducing the burden on local businesses. The risk with having rates which are based on turnover is that it is not a very consistent basis for a local authority to be able to plan into the future based on how much money might be coming to them in a given year. I would much rather focus on giving authorities more enforcement powers in order that they can collect more than they collect today. Some local authorities do this very well, while other local authorities do not do it very well.
I accept that approximately 5% get a reduction but I am talking about the people who have had increases. I am sorry to harp on about this and this is my second time to raise the issue in the past fortnight. However, the reason is that I am being contacted by local businesses in Kilkenny because of the revaluation that has been conducted in the past 12 months. They are coming to me with increases of 400%, 300% and 200%, which are too much for a business to take in one go. These are small and medium-sized businesses such as publicans, crèches, childminding businesses, which used to pay no rates, and beauticians. They are small businesses that are barely surviving and to go from paying €600 in one year to €2,400 is too much of an increase in one go. I am asking the Minister to change the system and bring the changes in over five years to give these businesses the chance to breathe before getting up to the next level. Three businesses have closed down on High Street in Kilkenny since Christmas. I do not say it is because of rates and it could be for other reasons but it is a sign. We need small and medium-sized businesses, as they are the backbone of employment in this country.
I wish to come in on this subject because Wicklow is going through its own revaluation process. We all know the value small and medium-sized enterprises have to each county, especially in towns. Through no fault of the businesses themselves, rates have not been revalued in 20 or even 30 years but the businesses are now faced with a revaluation process that is unjust and will involve a significant hike. Deputy Aylward is looking for some form of concession, meaning the increase can be spread over a period of time rather than over one year but the legislation does not have the necessary flexibility. Is there any way we can amend the forthcoming legislation to give the power to local authorities to take the increase and spread it out over a four-year or five-year period, given the fact that there has been a deficit in the revaluation process? This is impacting the heart of rural towns and villages but it is not the fault of businesses.
Increases of between 300% and 400% on the basis of revaluation sound very strange to me because-----
I have proof.
-----in my own local authority area 40% was a maximum and that was an outlier, with most people seeing rises or reductions of 10% or less. There is nothing I can do about it as the process is independent of me. Nevertheless, I would be interested to see how it is working out for businesses in those particular circumstances.
In the rates Bill, which is separate from this issue, we want to ensure local authorities have the flexibility to alleviate rates where they need to in order to help businesses in struggling areas, though the valuation rate is independent. When the legislation comes into the House I want to make sure we can achieve something that will give teeth to local authorities from the point of view of collection, and fairness in finding the balance between different businesses in their rateable areas. Whether it is national or local government, we should not do anything to hinder business but should support it as small and medium-sized enterprises are the backbone of our economy, and local business is what drives smaller towns and villages. Everything about Project Ireland 2040 is about opening the door to smaller towns and villages that saw a population exodus in previous years. Through greater investment and the urban regeneration fund, the rural regeneration fund and changes in technology and work practices, we will revitalise these towns and villages and we will give businesses the support they need.
