Rates review leaves local authorities out of pocket after confirmation of no Government compensation

Local authorities are facing multi-million funding shortfalls following confirmation that there will be no Government compensation this year following a rates review.

The global valuations review, which focused on the rates liability of companies with a presence in several counties, included utility service providers such as the ESB and a range of mobile phone companies.

The first review of its kind since 2010, it led last November to a massive €112m reduction in the valuation of property held by Gas Networks Ireland, Iarnród Éireann, and telecoms giants BT Ireland, Eircom, Vodafone, Three, and Meteor.

The lower property valuation resulted in a significant cut in their commercial rates liability, which in turn led to a massive reduction in local authority income.

The outcome of the review prompted the Government to sanction a €16.65m payment to the affected local authorities last year, but it only covered 72% of the adjustment. However, it has now emerged that this was a once-off payment and that councils will have to plug the ongoing shortfall in rates income themselves this year.

Cork City Council is facing a €1.6m shortfall in commercial rates incomes while Limerick is expected to be down an estimated €1.65m in commercial rates income.

“This is an absolute disgrace,” Cork City Sinn Féin councillor Mick Nugent said.

“Local Government Minister Simon Coveney needs to reverse this position and ensure that all local authorities adversely affected are compensated accordingly.”

He said that the global valuations review mainly benefited large and highly profitable companies and that last year’s government compensation package provided at least a cushion for already cash-strapped local authorities.

“It is shocking to think that councils will miss out on millions in revenue and that the shortfall will be made up on the backs of ordinary people through increases to their rates, Local Property Tax hikes or cut-backs in the provision of council services,” said Mr Nugent.

Sinn Féin spokesman on enterprise Maurice Quinlivan said not only should another compensation package be arranged this year, but the Government should also sanction a significant increase in the Local Government Fund which provides local authorities with the bulk of their income.

Local authorities collect in the region of €1.4bn in commercial rates annually to fund their activities.

There are an estimated 146,000 commercial and industrial properties in Ireland liable for commercial rates. Prior to the latest review, they were charged on valuations set in the 1980s. After the review, some properties faced lower rates, while some saw an increase.