As Minister with special responsibility for Local Government and having served as a member of Kilkenny County Council, I understand the vital role local businesses play in supporting local authorities to deliver services to their communities. Commercial rates, at approximately €1.5bn per annum, make up roughly a third of local government current (revenue) income.
Recognising the critical importance of commercial rates, I prioritised the Local Government Rates and Other Matters Act 2019 and it was enacted earlier this year. The Act modernises the rates system for both ratepayers and local authorities.
Local authorities are required by legislation 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 Acts 2001 to 2015.
The annual rate on valuation (ARV) is decided by the elected members of each local authority in the annual budget and its determination is a reserved function. The ARV is then applied to each property’s valuation to obtain the amount payable in rates.
The independent Commissioner for Valuation is currently conducting a national programme of revaluation 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.
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 16 local authorities that have undergone a revaluation to date and will be made in the coming weeks in respect of the eight local authorities where revaluations concluded this year.
The final tranche of revaluations should be completed by 2021. 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.
Local authorities work closely with ratepayers experiencing difficulties with the payment of commercial rates. In this regard, local authorities may facilitate the payment of commercial rates by instalments, and work with businesses to put in place flexible payment options. The Local Government Rates and Other Matters Act 2019 will further facilitate such flexible approaches, provided ratepayers engage with the local authority concerned.
Importantly, the Act also provides for rates alleviation schemes, to be decided by local authority members in order to promote national and/or local policy objectives, including for example, the implementation of the Government's Realising Our Rural Potential: The Action Plan for Rural Development.
My Department recently wrote to all local authorities highlighting the new alleviation provisions, contained in the 2019 Act, indicating that the work in respect of commencing Section 15, is underway. Local authorities were further advised that if they plan to implement an alleviation scheme in 2020, they should make a provision in their budget.