ISME: Retailers unable to pay rates

LOCAL authorities could face severe funding shortages following the revelation by ISME that half of retailers will be unable to pay rates this year.

ISME wants to see the rates burden expanded and called for rates to be imposed on church property, unregistered B&Bs, the re-introduction of agricultural rates and the introduction of metered water charges. The organisation is also calling for the implementation of the recommendations of the Local Government Review Report of 2010, outlining €510 million savings.

ISME chief executive, Mark Fielding, said rates are often the third highest cost item after wages and rent payments for business.

“They also have a disproportionate effect on small and medium enterprises as, unlike other taxes, they must be paid whether the business is profitable or not.

“In the last 10 years these rates have increased by a massive 47%, over twice the rate of inflation, as a result of local management ineptitude and Government’s failure to properly fund local government.”

An ISME survey, carried out on the week ending July 8, indicates that commercial rates are posing a threat to over 40% of SME businesses, with almost three out of ten unable to pay their current rates.

The main findings were:

* Some 40% acknowledge that rates are posing a threat to their survival. The retail trade is by far the most vulnerable, with 65% threatened.

* 28% of enterprises state that they will be unable to pay their rates in 2011.

* One in five has outstanding rates from previous years. The construction sector has the largest number of businesses in arrears, at 39%.

* One third will have outstanding rates at end of the current year, with over half of the retail sector predicting arrears.

Mr Fielding said that in the five years since 2006 rates, as a proportion of turnover, have increased by 61% in SMEs, as a result of increased charges and a massive reduction in SME turnover.

“At the same time, while business are struggling to survive, we have a ludicrous, incomprehensible and totally unacceptable situation of local authorities squandering money, through blatant inefficiencies and downright bad management,” Mr Fielding added.