Mick Wallace The #US and #EU are increasingly using #sanctions as a weapon against countries that don't bow to their financial i… https://t.co/qMbVI1XYfc
Mick Wallace How bad that the #EU of the so called 'European Values' has supported this Terrorism against the people of #Syriahttps://t.co/wRXMSubfYi
Mick Wallace Western Colonialism never really stopped, it just got a make over - It's now called 'Financial Imperialism'. Are we… https://t.co/KoMpQ69bBw
Mick Wallace RT @wallacemick: Would mean something for Irish people and the notion of 'Irish Neutrality' if Irish Minister for Foreign Affairs @simoncov

 

Dáil Diary no 13- 13 Feb. 2015

Commercial Rates- No link with ability to pay…

Commercial Rates in Ireland are a massive problem for small and medium size businesses.The complex and technical measures used by the Valuation Office in producing the rateable valuation figures, is one problem, the pressure on the Local Authority which is forced to depend on commercial rates is another. Added to the problem is the fact that rates are not linked to the ability of the business to pay. Here’s part of my twenty minute contribution on the issue in the Dáil yesterday-

Each Local Authority has to decide what funding it needs for the year, and then work backwards and introduce a rate which will produce that amount of money. This system is far from ideal, and it puts the local authority in a very difficult position, as they are starved of central funding. It is tough trying to run a small business in Dublin which depends on the domestic economy, but it is even more difficult in the countryside. It is a big problem when the local authority is compelled to be tough on small businesses to get the money it needs to run its operations.

In 2014 there was a vacancy rate in premises in Wexford of 13% as a result of the downturn. The percentage of rates collected was just over 69%. It is the case that money cannot be got because businesses are finding it too challenging to pay rates. The growth of Tesco, Aldi and Lidl has put very great pressure on small shops. It is very difficult for a small shop in competition with the big supermarkets to be able to pay rates. When a council introduces its rate of valuation, it is not considering how a particular business is doing. Deputy Fleming suggested that it might be better to tie the rateable valuation to rent and there is some logic to that argument. The Minister of State may be able to highlight pitfalls in that suggestion of which I am not aware. I see so many places in the countryside in my county of Wexford, for example, where life is very difficult for businesses.

I have been speaking to the people who collect the rates in Wexford and they find it almost impossible to collect the rates from many pubs. When the pubs were doing well a few years ago, many of them built big lounges because they knew they could fill them. Nowadays, they may only be using one third or a half of the premises but they are being rated on the entire premises. There is not a rateable valuation for half of a premises whereby the rate is only charged on the space being utilised. I suggest the Government should consider such a rate because it is a rational idea. If the owner makes the case that he is only using half of the premises, I do not think it is fair to ask him to pay rates, for areas he is not using.

A problem is coming down the tracks in places such as Wexford where urban councils are being done away with. The rate on valuation which has been fixed for 2015 by Wexford County Council is €71.52. New Ross is not a thriving town and life there is difficult for small and medium-sized businesses. The rate on valuation there is €55.47. Dragging these businesses up to a rate on valuation of €71.52, which will be done over a few years, will be very difficult for them and this should be considered. If business is weak in one town but very good in another town 20 km away, the same commercial rates should not be charged in both. Ability to pay is not factored into rates, but it is at the core of the issue.

We have had some problems with rates on properties of our own, and I was very curious as to how things were done in Dublin city. I went to the Valuation Office, where Patrick Kyne and Declan Lavelle work, and I was really impressed at how it does things. The staff there do their best with a very archaic system. They were very impressive. I could see they are trying to be as fair as they can. I spent approximately two hours there and we looked at all of the various streets in Dublin, which I know pretty well, and the different rates on different streets. One guideline the office has is to grade units from A to D, depending on how far they are from the footpath. Those graded A are most expensive because they have the most shop front.

We have a wine bar on Russell Street and it is almost all A graded, including the kitchen, which makes the rates very high. It does not take on board the fact we do not have tables in all of the area, whereas most restaurants place their tables as close as they can to the street front. People like to see their food being cooked, and it is good for a restaurant to be able to do this. We put the kitchen very close to the street with the tables around it, and end up paying too much for kitchen space and storage.

It is very challenging for the Valuation Office to come up with a fair system that works fluidly across the board. We have just been revalued in Dublin and there has been debate about it. The rents on two of our units have reduced by approximately 30% but the rates on them have increased by approximately 35%. This does not make commercial sense. The rent reflects the value of the unit at the time and its earning capacity. If a unit can make a lot of money, the guy who owns the building will charge a bit more for it and it will be reflected in the rent. A decrease in rent also reflects the level of business going on at the particular time. The fact the rates are not connected to this is problematic.

Earlier I mentioned the many vacant units in the country. When someone considers the prospect of renting a unit, the rates can be very challenging. I wonder whether consideration might be given to the idea of a rate-free period for vacant units, particularly in provincial towns and villages, to encourage people to move into them. There are so many empty units in Ireland at present that many of them will not be filled for a long time and some of them may not be filled again. It would be good if the Government were to introduce a measure to encourage people to take on these units and a rate-free period would certainly help.

This year, Wexford County Council intends to collect approximately €37 million. I know many people in small businesses in Wexford who do not think much fairness is applied to what they must pay. As long as the local authority needs the money to survive, it cannot go any easier on them. Last year, Wexford County Council wrote off €5 million which it knew it would never get. I am afraid if there is not more flexibility with some customers who are in difficult times, they could soon be added to the list of vacant units.

I admit that in 2014 we saw larger numbers come through the doors of our Wine Bars in Dublin, mostly through tourism, as there was an increase in that sector. Businesses in places such as Wexford are not getting the same boost and that is a major problem. I have never seen so much of a divide as now exists between the countryside and Dublin. Ireland depends too much on foreign direct investment, and the days of telling the large foreign corporations that come into the country, where to set up their businesses are probably gone. Most of them want to be within the Dublin orbit because it is far more attractive to them.

I firmly believe that some day, a Government will put much more energy into developing indigenous industry. I am convinced that so much more can be done in this area. The provinces will continue to struggle until we put far greater energy and investment into creating indigenous industry and helping people with start-ups. It goes back to the old chestnut of where do we get the money and there not being enough of it. We have had that discussion time and again with regard to different areas with different Departments. The fact that we can borrow money at 1.7%, or less sometimes, on the markets, in order to do certain things but we are not allowed to do other things and are forced into the hands of the private sector, through public-private partnerships and other different arrangements, where money costs in the range of 15% is very unfortunate. If Europe is to function in the proper spirit of what it was designed to do, that is something that must be addressed. The State should be allowed to borrow money at 1.7% to invest in indigenous industry, infrastructure and in any area that it is needed without being driven into the hands of the private sector.”

Mick Wallace.

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