Deputy John Deasy asked the Minister for Public Expenditure and Reform if his attention has been drawn to the massive increases in commercial rates due to be levied on businesses in County Waterford on foot of a statutory revaluation of commercial rates in Waterford city and county; and if he will make a statement on the matter.
Reply from Minister Brendan Howlin: As the Deputy will be aware, the national revaluation programme aims to provide up-to-date valuations for individual properties across all economic sectors that are subject to local authority rates. The revaluation process is the mechanism whereby economic changes that take place in the property market are reflected in the valuation lists for rates purposes and in individual ratepayers’ rates liabilities. The national revaluation programme is a priority for Government and is a feature of the Action Plan for Jobs 2012. The programme is particularly important given the significant changes that have occurred in rental values following the economic downturn of recent years. The purpose of a revaluation is to distribute commercial rates liabilities more equitably among ratepayers based on up-to-date values. Following revaluation, there will be a much closer relationship between rental value and commercial rates liability. Even though property values have fallen generally, given that the purpose is to redistribute the overall rates liability, some ratepayers will obtain a reduction while others will experience an increase from the process of redistribution but, overall, revaluation results in a fairer distribution of the rates burden.
Under Irish law, there is a distinct separation of function between the valuation of rateable property and the setting and collection of commercial rates. The amount of rates payable by a ratepayer in any calendar year is a product of the valuation of that property determined by the Valuation Office and the annual rate on valuation (ARV) set annually by the elected members of the rating authority. Revaluation is the mechanism whereby movements in property valuations as a result of economic factors are reflected in valuation lists. Following the first revaluation in each area, the Valuation Act 2001 provides for subsequent, recurring revaluations to be carried out at intervals of a minimum of 5 years and no later than 10 years. This will ensure that movements in the property market are tracked and reflected in rateable valuations within a reasonable timeline, which has not been the case heretofore. Accordingly, individual valuations would be established and remain fixed for a 5-10 year period. On the other hand the ARV can, as determined by the elected members of the rating authority, vary from year to year and therefore so can the amount of rates payable annually.
Valuations reflect the value of all individual properties in particular rating authority areas at the statutory valuation date (28th October 2011 for Waterford). Movements in valuations since the last date by which valuations were set (1988/89) reflect the relative changes to rental values within and between sectors such as retail, industrial and hospitality between 1988 and 2011. Accordingly, some businesses will have an increase in their rates liability while others will experience a decrease following revaluation.
The setting of valuation levels during a revaluation exercise such as that underway in Waterford City Council, Waterford County Council and Dungarvan Town Council is based on market evidence available to the Valuation Office, including information solicited from and provided by ratepayers. In establishing the levels for rateable properties, the Commissioner of Valuation is independent in carrying out his function. In relation to particular cases there is, of course, a well established statutory process whereby a ratepayer, if he or she considers that the proposed valuation or any of the details contained in the Proposed Valuation Certificate are incorrect, can make representations to the Valuation Manager. There is also a subsequent statutory right of appeal to the Valuation Tribunal, an independent body set up for such purposes and subsequently, on a point of law, there is an appeal to the High and Supreme Courts.
In keeping with the principle of separation of function between the valuation of rateable property and the setting and collection of commercial rates, the amount of rates that a rating authority can raise is generally a matter for decision by the Minister for the Environment, Community and Local Government and does not come within the competence of the Commissioner of Valuation whose sole responsibility lies in administering the system of rateable valuation as underpinned by the Valuation Act, 2001. However, in so far as valuation legislation is concerned, there is a specific provision in the 2001 Act which allows the Minister for the Environment, Community and Local Government to make an order requiring a rating authority to exercise its powers to make rates in such a manner that it does not exceed the amount of rates liable to be paid to it in the first year following a revaluation except for any increase determined by the consumer price index.