A perverse rate hike

Does Dublin City Council have a jobs strategy for the city? The question is prompted by some pertinent comments from Stephen Sealey, managing director of one of the capital's most prestigious department stores, Brown Thomas. The company, which employs some 1,000 people, is next year facing a large increase in its commercial rates bill – to €1.1 million. And Mr Sealey has raised two concerns about the huge rise, up almost 50 per cent.

First, he questions whether Brown Thomas can meet the rates bill without laying off staff. This, he said, would be done reluctantly, and as a matter of last resort. The higher rates bill will reduce company profits, and Mr Sealey will attempt to recover some of these higher costs. But weak consumer demand in the retail sector means higher costs cannot easily be passed on to customers in higher prices. And second, he asks whether other city-centre businesses – which are in a weaker trading position than Brown Thomas and also face large rate hikes in 2014 – will be able to meet the council's demands. His concerns are shared by Retail Ireland, a lobby group. Its recent survey of eight large Dublin retailers, with more than 60 outlets, showed that higher rates present a huge challenge. Those retailers surveyed are facing rises of between 30 per cent and 80 per cent next year in their annual rates bill.

It is hard to understand the logic of Dublin City Council's approach. To impose higher commercial rates on retailers, whose sales have fallen sharply during the recession and have failed to recover, will achieve little. Certainly it will raise significant revenue for the council, but at the likely cost of more job losses in the struggling retail sector. Ministers like to talk about the measures the Government is taking to facilitate employment growth, via its jobs strategy. The Government should take a closer look at what others – such as Dublin City Council, by raising commercial rates excessively in a recession – is doing to frustrate its good intentions.