“You consistently gave assurances that you would try to bring the ARV to the lowest level in Waterford – the Dungarvan level – and you did that."
Additional rates reliefs have been included in the new Local Government Bill after Minister Phil Hogan accepted proposals by Waterford Fine Gael TD John Deasy and Labour Deputy for Dublin Mid West, Robert Dowds.
The Minister was thanked for taking the thrust of two joint-amendments they put forward and incorporating them into the new legislation as it passed through the Dáil on Wednesday. Deputy Deasy said Mr Hogan had been ‘as good as his word’ when it came to reducing commercial rate levels in Waterford.
The first change the TDs sought and secured was in respect of a planned rates refund mechanism for vacant premises. In taking their arguments on board, the Minister is to give discretion to elected councillors right across the country to allow owner/occupiers who can’t secure tenants a full rates rebate – not a maximum of 50% as the Bill originally proposed (and which is currently applied in Dublin, Cork and Limerick).
Deputy Deasy said: “The Minister accepted there are areas where there is little or no demand for commercial premises. Councillors will now have the authority to tailor vacancy refunds – from 100% down to zero – to best suit the economic circumstances in particular counties or specific municipal districts.
“While I understand how some local authority officials would have seen a need to have a deterrent to people holding onto sites, to have a blanket 50% rebate would have been madness in this economic climate.
“There is a two-tier economy in this country. In some areas, like my own homeplace of Dungarvan, it’s not a matter of choice. In many parts of Ireland owners simply can’t get tenants for commercial premises. And enabling this to be implemented on a district level will allow for the differences between rural and urban areas.”
Work of Waterford Chambers acknowledged in Dáil
The Deputies – who are colleagues on the Dáil Public Accounts Committee – also proposed an amendment dealing with the issue of outstanding rates charges being passed on to new occupiers; something the Minister was anxious about as well.
“He accepted that maintaining the status quo could give rise to an unfair burden on businesses seeking to expand, relocate or start up. In some cases the arrears on a particular premises were holding up the sale,” Mr Deasy said.
“In dealing with and introducing a reasonable variation of our amendment, he is giving city and county managers the authority to write off arrears owed by previous occupiers – meaning property that may otherwise have remained vacant can now be re-let.”
Deputy Deasy said the Minister had lived up to his word in their interactions on commercial rates over the past year. “You consistently gave assurances that you would try to bring the ARV to the lowest level in Waterford – the Dungarvan level – and you did that.
“I’d like to thank you for following through on what you said you would do... I was keeping a close eye on this situation for the past year. But you were consistent with regard to the issue, and it’s turned out to be, in the case of the city, a really excellent result when you consider ratepayers there received a reduction of 20%.”
While county rates were reduced by 5%, some people felt it unfair that the Dungarvan ARV level should remain as is. But “for the most part the feedback I’ve been getting is that they expected it to go up,” Mr Deasy said.
He told Minister Hogan: “I think it’s worth acknowledging the direction that you gave. And everyone’s taking credit for it in Waterford – councillors, officials – but you were consistent”.
This included putting more money into Waterford’s Local Government Fund allocation with a direction that it be used to reduce the rates level locally.
From the floor, Deputy Deasy also said he wanted to acknowledge “the work of Waterford City Chamber of Commerce – Nora Widger and Nick Donnelly – and Dungarvan & West Waterford Chamber of Commerce – Jenny Beresford and Collette Bannon – on this issue.”
Environment Minister Phil Hogan has intimated to John Deasy in the Dáil that business rates could be harmonised “downwards” after Waterford’s local authorities amalgamate next year.
As the new Local Government Bill passed report stage, Deputy Deasy has again argued for changes to be incorporated into the new legislation.
Referring to the harmonisation of rates across councils set to merge in 2014, the Minister suggested to Deputy Deasy that a lowering of rates in Waterford and elsewhere could occur.
“If local authorities are in a position financially to harmonise their rates in one go… we will do so,” the Minister said. “This is about harmonisation of the systems in place downwards, not upwards.
“At the end of the day, it is a matter for the elected members, who have a reserved function on this matter at budget time, to ensure that is the case,” Mr Hogan added.“Any savings that will accrue from the reforms we are undertaking should not impose any additional cost on business.”
Deputy Deasy directly raised the harmonisation issue with Mr Hogan in the Dáil last May, having first addressed it at the Public Accounts Committee a year ago when he pointed to the large variances in annual rateable valuations between the merging councils in Waterford City (€66.22) and County (€69.92), and Dungarvan Town Council (€60.37).
Minister Hogan also indicated he is willing to accept an amendment tabled by the Waterford Fine Gael TD and Dublin Labour deputy Robert Dowds to give discretion to councillors to grant either a full or 50% rebate on rates to owners of vacant business premises. The Bill originally proposed a 50% concession across councils countrywide, “which would be a mistake,” Mr Deasy said.
Another proposal that the Minister is considering is to allow city and county managers waive historical arrears tacked onto a new sale or leasehold.
Mr Hogan agreed with Deputy Dowds at committee stage that incoming businesses shouldn’t be burdened with a legacy debt not of their making, and “I’ve asked the legal people to draft up an appropriate amendment that hits the spirit of what you want.”
A third Deasy/Dowds proposal, namely, a transitional relief scheme that would spread out revaluation increases by rating authorities over three years, is being “constructively” considered by Government officials.
Fine Gael TD John Deasy and Labour Deputy Robert Dowds – both members of the Dáil Public Accounts Committee – are working on proposed changes to new legislation which would allow commercial rates increases to be spread out over a number of years, and alter the planned rates refund mechanism for vacant premises.
The Local Government Bill 2013 was published by Environment Minister Phil Hogan last week, setting down a legislative framework for the new local authority structures being introduced next summer.
One aspect of the Bill relates to how councils deal with commercial rates. However, Deputies Deasy and Dowds – a TD for Dublin Mid-West – are concerned that it doesn‟t take the current Valuation Office review of rental values, nor local economic circumstances, into account.
Consequently, they are planning to submit joint amendments to the Bill when it goes to report stage in the Dáil in the coming weeks.
Mr Deasy said: “For the past number of months I've been highlighting the potentially crippling impact the current revaluation process underway in Waterford – and parts of Dublin – would have. It particularly affects the retail sector, where most businesses locally are facing a significant upward adjustment of their rates bill; a hike of up to 300% in some cases.”
While the Bill provides for phasing in the effects of rates “harmonisation” – i.e. where different local authority areas with different Annual Rateable Valuations will be merged – the proposed legislation doesn't factor in the damaging impact a sudden revaluation hike would have.
Deputy Dowds said: “Even though the Valuation Amendment Bill has been introduced in the Oireachtas and provides for a new system of self-assessment of commercial rates, there needs to be a provision which allows for regular reviews on a statutory basis so that businesses can budget accordingly.”
Mr Deasy added: “What we are looking at is a way of giving councils powers whereby the elected members can decide to allow businesses whose rates bill is being increased as a result of revaluation to spread the 'hit' over a number of years.
“The Bill as published would abolish the refund regime entitling owners of vacant commercial properties to a 100% refund of their commercial rates liability in certain parts of the country. In many cases businesses would not be able to afford that refund regime changing in any respect.
“Once the Minister has given his response in this week‟s second stage debate, we will consider how best amendments might be framed to ease the burden on businesses as much as possible.”
::: Brendan Howlin: message
The Fine Gael Parliamentary Party has unanimously supported a motion by Waterford’s John Deasy requesting that the Department of Public Expenditure & Reform conduct an analysis of the potential impact substantial increases in commercial rates may have on struggling businesses.
The proposal, tabled in the context of the ongoing revaluation process, was passed at Wednesday night’s (July 3) meeting of TDs and Senators in Leinster House.
Deputy Deasy, who has alerted cabinet colleagues to the precarious position on the ground, says the message to Minister Brendan Howlin couldn’t be clearer – and insists the prospect of pushing businesses beyond breaking point can’t be ignored any longer by Government.
“We can’t sit back and allow businesses go to the wall because of rateable valuation increases introduced on our watch,” Mr Deasy said afterwards.
“There are countless examples of how this is affecting retailers in my home town of Dungarvan – a situation mirrored elsewhere in Waterford, not least in the city.
“You’re talking about petrol stations needing an annual turnover of around €1.3 million just to remain viable – or a newsagent needing to put €1.2m through the tills just to cover its €50,000 rates bill. It’s simply unsustainable.”
Deputy Deasy added: “There’s new legislation due to come before the Dáil later this year that will pave the way for self-assessment and hopefully a fairer system that reflects business realities. I’ve already called on the Taoiseach to have the Valuation (Amendment) Bill, 2012 expedited through the Oireachtas.
“In the meantime, given the knock-on effects this revaluation process will have in terms of a lower tax take, and unemployment benefit payments, in my view the Department is now obliged to examine the consequences of the current valuation review at both a micro and macro level.”