Local authorities to be allowed cut commercial rates

Local authorities are to be given the power to significantly reduce commercial rates for businesses in their areas as part of a move agreed by the Cabinet.

The long-sought measures will allow councils to introduce rate-alleviation schemes and potentially reduce the bills for companies across the State.

The changes follow reports of business owners facing three or fourfold increases in their rates following valuations of their premises in the wake of the crash in property prices and sharp recovery of recent years.

Minister for Housing Simon Coveney last week secured approval to repeal the legislation governing rates and replace it with a more modern system. His proposals include a six-month exemption from rates when a property becomes vacant to allow the owner to seek new tenants.

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“We need to also ensure that we remove as many potential disincentives to the use of vacant properties so that they can be put into productive use,” Mr Coveney told The Irish Times. “The lack of any charge on vacant premises may also remove the level of certainty regarding the collectable amount of revenue.”

Commercial rates are paid by the occupiers of commercial premises and are central to the funding of local authorities. Rates accounted for almost €1.5 billion, or 32 per cent, of their total income in 2015.

Mr Coveney is not proposing to change the income stream to councils but insists changes have to be made to ensure business owners are not unfairly penalised.

Stronger enforcement powers

The new measures will enable local authorities to introduce levy rates based on temporary valuations from the Valuation Office. The latest figures showed 6,000 premises were waiting to be assessed, with nearly 3,000 of the cases dating back a year.

The changes will also give local authorities stronger enforcement powers to levy and collect rates. The legislation that governs commercial rates dates from the 1800s and has been amended on several occasions.

Mr Coveney, who is seeking to be the next the Fine Gael leader, said the current legislation was outdated, creaking at the seams and the subject of adverse commentary in a number of court cases. He said the legislation was confusing and needs to be modernised and simplified.

“It is spread over in excess of 20 separate enactments, dating back to 1838. As such, the overall legislative framework is complex and unclear for practitioners and rate payers,” he said.

“Many of the provisions of the legislation are also outdated at this stage and are not suitable for business trends in the modern era.”

Fianna Fáil also welcomed the measures but said the legislation should be retrospective to assist businesses that have seen huge increases in their rates bills.

The party's housing spokesman, Barry Cowen, said there was a need to meet the modern demands of the commercial sector.

However, he said Mr Coveney should assess if the law can be be backdated to assist business owners who have already been penalised.