Business groups call for shake-up of commercial rates

Commercial rates are based on an outdated system of “clauses, clichés, and constraints” that need reform, according to the boss of Cork Business Association.

Chief executive Lawrence Owens was responding to a survey of more than 1,600 businesses across the country by the Irish Small and Medium Enterprises Association (Isme), which found that three out of five small firms expect huge increases in commercial rates when they are next assessed.

According to the results of the survey, more than half will appeal against an increase in rates. Ulster businesses pay the most, averaging just over €20,000, while businesses in Leinster, excluding Dublin, pay just under €8,900. Dublin City businesses in isolation pay almost €10,500 and businesses in Munster pay €10,200, while businesses in Connacht pay €13,300 on average.

Isme chief executive Neil McDonnell said rates “disproportionately affect small and medium enterprises as, unlike other taxes, they must be paid whether the business is profitable or not”.

He said Isme is calling for a fundamental rethink in how commercial rates are charged.

Mr Owens echoed Mr McDonnell’s call, claiming the current system is rooted in anachronistic principles from the 1800s.

“Retail worldwide especially is in a phase of change,” said Mr Owens. “In Cork, most SMEs are family-owned and want to continue into the future. But rates are probably the second-highest cost after wages. We would like to see more power and flexibility given to the local authority when it comes to rates. A little empathy and common sense goes a long way.”

Mr Owens said Cork is coming off a turbulent period when the bus strike hit trade in the city centre particularly hard.

“It couldn’t have been a worse 20 days for traders in the city centre,” he said. “If we had a little flexibility and less rigidity in the future, it would make a big difference for suffering traders. The current system is outdated and full of clauses, clichés, and constraints that simply don’t reflect business in the 21st century.

Mr Owens said Isme’s suggestion of a 50% set commercial rate and 50% calculated on profitability is worth considering.

Isme said more than two-thirds of the 1,660 respondents to the survey want to see such a system. More than half have fewer than 10 employees, while another two-fifths of businesses had fewer than 50.

Mr McDonnell said: “Commercial rates are hurting many small businesses across the country, forcing some to let staff go and, in some cases, forcing business closure. We urge those in a position of influence to address this situation. Businesses understand the need to pay local authority rates to help fund local services, but most of these now attract utility charges. Small business can’t be asked to pick up the tab just because politicians have baulked at the water charges issue.”