Hogan: Home tax will help to cut rates

The property tax should help local authorities reduce commercial rates for struggling business, according to the environment minister.

As the property tax system “beds down”, and once the rates structure is harmonised under his local government reform plans unveiled last week, local authorities will be in a position to reduce the burden on rate-payers, said Phil Hogan.

The minister has also called for concrete progress on the long-awaited boundary extension for Cork City — the first since the mid-1960s — before the end of 2014.

However, such contentious boundary extensions will become less important thanks to the sweeping reforms of the local government system, he said.

“I am signalling my intent now that we want to drive down commercial rates, particularly to the small businesses who are suffering because of the high costs levels of commercial rates at the moment and particularly where footfall is low.

“I want to see that now we have a local property tax, and with a harmonisation structure of rates in place over a period of time, we will drive down the costs for the small business person to be able to make more of a contribution than they are now.”

However, Cork Chamber chief executive Conor Healy said hard-pressed businesses needed to see swift action on rates, which remain one of the single biggest challenges facing businesses today.

“Rates is a big issue for every single employer and big reductions do need to be made,” he said.

“Cork Chamber has nearly 1,100 members, employing 100,000 people across the region, and rates is one of the key issues from a competitiveness point of view.

“But the bigger challenge around that is the whole structure of rates — it’s an archaic and antiquated system that needs to be looked at from a root-and-branch perspective, and that needs real commitment from government.”

The Commission of Valuation, which has sole responsibility for all valuation matters, is currently revaluing all commercial and industrial properties across the State to provide for more consistent and up-to-date valuations for rating purposes, and to help provide a more equitable distribution of property valuations.

A bill before the Oireachtas has been designed to accelerate the valuation process, to minimise exemptions from rateability, and to streamline the appeal procedures, among other issues.

Government figures for 2010 show that commercial rates income accounted for 28% of all local authority income.

Across the 88 local authorities, the average change of annual rate of valuation from 2012 to 2013 showed a decrease of 0.34%, following a similar decrease of 0.31% in 2010, 0.64% in 2011, and 0.62% in 2010.