Cork businesses face rate increases to cope with losses in local authorities

Businesses could be facing rates increases to offset significant losses in local authority rates income following a nationwide review of utility companies.
Cork businesses face rate increases to cope with losses in local authorities

The news emerged after it was confirmed that the cost to Cork City Council alone of the first global utilities revaluation in five years will be just over €1m — much higher than what was expected.

The office of the Commissioner for Valuation is responsible for setting the valuation of business property nationwide — premises which are liable for commercial rates.

Each local authority then uses this valuation to apply an annual rate on valuation which determines how much rates each business pays. These commercial rates are the largest source of local authority income.

The valuation office concluded its first global revaluation in five years last November in respect of Gas Networks Ireland, Iarnród Éireann, and telecommunications companies BT Ireland, Eircom, Vodafone, Three Ireland, and Meteor.

It resulted in their combined valuations reducing by €112m which will see them paying much less rates to local authorities. Following an appeal to the valuation tribunal, the ESB also secured a significant rates reduction.

Arising out of the review, the Department of Environment has made arrangements for a once-off compensation payment of €16.65m to be distributed to the affected local authorities to cover some of the losses.

Last November, Cork city councillors were told ahead of their 2016 budget meeting that the move would hit the council’s coffers to the tune of some €762,000. But it has now emerged that the loss of rates income after the review will be €1,035,000.

In a written report to councillors on Monday, the city council’s head of finance, John Hallahan, said: “This is higher than previously reported due to the fact that the Ervia building on Gasworks Rd, previously classified as offices/retail warehouse, has now been reclassified into the global valuation for Gas Networks. There was a 40% reduction in Gas Networks Ireland’s global utility revaluation.”

Cork Chamber chief executive Conor Healy
Cork Chamber chief executive Conor Healy

He said the council is set to receive a once-off compensation payment from the department of €751,361 — a figure which will only cover 73% of the loss.

In his written report, Mr Hallahan said the city council will closely monitor its actual financial performance compared to its budget to see if additional income can be achieved in order to counteract the impact of the loss of income on rates. But addressing councillors afterwards, he said a rates increase may have to be considered in the long-term if the council’s income streams aren’t boosted in other areas.

He said city management hope they don’t have to increase rates, which have remained unchanged since 2008, and hope that the opening of new businesses would provide extra income.

Cork Chamber chief executive Conor Healy said it would not be acceptable that further rate increases be imposed on city businesses to compensate for any losses arising out of such rates reviews.

He said: “Businesses in the city already account for over 40% of the city council’s total revenue and that has increased significantly in recent years. Businesses can’t continue to provide that level of funding to the local authority. What we need to see is central government reducing the requirement on businesses to make such a significant contribution.”

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