The city council will next Monday cut rates by 16%, bringing it in line with rates in suburban shopping centres in the country area.
The move follows a decision by the Department of Local Government to give €3.5m to assist in the rates equalisation process.
The city rate will fall from 71c per rate of valuation to about 60c per rate.
Limerick city traders have been paying some of the highest rates of any city and many outlets have been forced to close.
The decision comes days after University of Limerick announced it was to develop a city centre campus to the tune of €224m.
Limerick city and county manager Conn Murray said the rates reduction is a milestone. “The value of this rate reduction equates to €4.59m going back to the ratepayers and should significantly help businesses to remain competitive and will for the first time in our history bring about a single rate for Limerick (city and county).
“This unprecedented reduction will help stimulate the local economy and shows the commitment of Limerick City Council to businesses in order to generate employment and create an environment for continued growth and prosperity.”
Cllr Diarmuid Scully, chairman of the council’s economic committee, said the rates reduction was bigger than he had anticipated.
“We had been working towards a 5% reduction — this was the most we would have been able to manage out of our own resources. I didn’t expect ministers Phil Hogan and Michael Noonan to play the role of Santa Claus. The reduction will remove the disincentive to do business in the city.”
Fine Gael TD Kieran O’Donnell said a thriving Limerick city centre was essential for the economic well-being of the entire Mid-West region.
Auctioneers have reported a major upsurge in negotiations on city centre retail properties.
Ernest Cantillon, president of the Cork Business Association, agreed that Limerick was receiving a huge drop in its rates.
But he added that if the levy in Cork were merely to stay the same — and he is hopeful it would — traders were reasonable enough that they would be satisfied.
“They know that there is a trade-off. For example, when they see the amazing carnival on Grand Parade — someone has to pay for that. I think Limerick are possibly behind the curve a little bit and they have got a good bit of momentum. A reduction in rates would be great, but at what cost?
“Cork is in pretty good nick. There are very few prime spots vacant and if they are it is for a reason. Cork is in much better state than Limerick — it needs it. I think if there was any chance that we thought the Cork City Hall budget could balance with us taking a rate reduction we would be screaming for it but I think there is no chance without cutting some other service that is as or more important.”