CCI wants cap on commercial rates

Businesses should pass increases in commercial property rates levied by local authorities to their customers, the Chambers of Commerce of Ireland (CCI) said yesterday.

Calling on the Minister for the Environment and Local Government, Mr Dempsey, to cap commercial rates at their current levels to tackle inflation, the body said local authorities increased commercial rates by 4.6 per cent this year.

"We're saying that if a local authority decides to put up the rates, we're not advising businesses to absorb that. The only option for business to pass it on," said the body's research officer, Mr Malcolm Byrne.

A move to cap rates would be similar to initiatives adopted by the Minister for Health and Children, Mr Martin, and the Minister of State at the Department of Enterprise, Trade and Employment, Mr Kitt, said the body's president, Mr Tom Clarke. Said Mr Clarke: "If Micheal Martin can tell the VHI not to increase their charges and Tom Kitt can seek to limit the prices that publican's charge, surely Noel Dempsey can prevent local authorities from also contributing to inflation by forcing up costs for business.

"This is especially the case as commercial rates have increased at a rate of more than double that of inflation over the past ten years."

Citing moves by the Government to cap commercial rates increases at 5 per cent this year and last, a spokesman at Mr Dempsey's Department said: "The principle of capping is established. The process doesn't place until the autumn."

This was "a normal part" of compiling local government estimates, he added.

When asked whether the Mr Dempsey would consider capping rates at their current levels, the spokesman said: "We can't anticipate now what the Minister is going to do."

The Valuation Bill published last June will change the system used to calculate rates when enacted and it is expected to go before the Houses of the Oireachtas at the end of the summer recess.

In a survey on commercial party rates titled The Forgotten Business Tax, the CCI said an aggregate increase of 47 per cent of the sums paid in 1991-2000 compared with an aggregate inflation rate of 22 per cent in the period.

"What this means in practice is that a typical small enterprise may have paid £2,000 in commercial rates a year in 1991 would by 1996 have been paying about £2,500 and would now be paying close to £3,000," said Mr Byrne's report.

"One of the major difficulties with such increases is that there is no guarantee as to what levels of increase can be expected from year to year. Even the 5 per cent cap that Minister Dempsey introduced is being breached by some local authorities. One thing is for certain - the rate in the pound has not been reduced by any local authority in any year over the past ten years."

The report continued: "One pound in every four in current expenditure of local authorities comes from commercial ratepayers."