It’s a mantra that has been rolled out time and time again by the Government: “The best place in the world in which to do business”.
Cue plaudits from governments around Europe and the world. Queue exasperated sighs from domestic business. For within that phrase lies one of the great embarrassments of Irish business — local authorities.
For this week’s Small Business Show I interviewed Gerard Maguire from 64 Wine about why he is protesting a new local authority charge in Dún Laoghaire-Rathdown. The local authority backed down on a €1,100 charge and businesses in the area will now only have to pay €50 a year licence fee to put tables, chairs, and sandwich boards outside their shops.
Read that sentence again. Now tell yourself that this is the best little country in the world in which to do business.
Local authority charges from commercial rates to grease taxes are designed for one thing and one thing only, to get money now. It is lazy local government and even lazier economics. Finding ways to incentivise more and more businesses to open, which in turn would increase the coffers of said authorities, is far from their minds.
Authority charges are a necessary evil in much the same way as taxes. But SMEs have never said they don’t want to pay commercial rates or other such charges. What they want are rates that reflect their businesses and their income. Many have suggested that rates should be based upon gross income which would allow authority charges not to exceed a certain percentage of a company’s income.
It would be unfair to say that all authorities are the same. Recently, Limerick reduced their business rates by 15% in order to encourage new businesses back into the city centre.
The amount of empty shop fronts was starting to get embarrassing for the city and something needed to give. But the point is they started in the one place they knew which mattered to SMEs — the rates. But the good ones are few and far between.
Local authorities seem very good at inventing charges and yet perform poorly when asked to incentivise small firms.
In the US, the individual states themselves are encouraged to compete with one another in order to draw in business. This means everything from rates to state taxes are on the table in order to look attractive to prospective business. States fight for business.
Here it seems to be a take it or leave it approach. Perhaps if local authorities took a leaf from SME books and asked how they sell themselves to businesses, the issue could be about where in Ireland is best for business.
The best little country in which to do business. But until then local authorities will remain where they are — Ireland’s great business embarrassment.