Commercial rates hike puts 'another nail in coffin' for struggling Cork businesses

Cork City Council approved a 3.8% hike in commercial rates as they adopted the city’s 2023 budget. Picture: Denis Minihane

Local authority rate hikes in the midst of energy, inflation, and cost-of-living crises are “another nail in the coffin” for already struggling businesses and will make many unviable.

That was the warning from Mike Ryan, chair of the Cork branch of the Restaurants Association of Ireland, after members of Cork City Council approved a 3.8% hike in commercial rates as they adopted the city’s 2023 budget. The rates had only risen by a total of 1.2% in the previous 13 years.

The hike in Cork follows a 4% increase in the rates by Dun Laoghaire Rathdown County Council and a 3.5% increase in Leitrim, with a 2.5% hike on the cards in Clare.

Mr Ryan, who runs the Cornstore and Coqbull restaurants in Cork City, said the additional operating cost will render many businesses unviable.

“After the massive increases in gas and electricity costs, it’s coming to the stage now where it’s becoming almost impossible to sustain a business," he said. “Hospitality and retail have been hammered in recent years. The subsidies help, every little helps, but increases like this hurt too. They seem to give with one hand and take away with the other. I think some businesses will be able to hang on for the next six to eight weeks but we will see a different landscape in January.” 

Councillors voted 24-5 to adopt a budget which will see some €268m spent on the delivery of services next year, up €28m compared to the 2022 budget.

The main contributors to the increased expenditure are a €4m increase in the housing budget, a €9.3m increase in payroll due to national pay agreements, an €8m increase in energy costs, an extra €500,000 on homeless services and on roads resurfacing, and a €1.8m increase in a Transport Infrastructure Ireland grant.

There will be no increase in car parking charges, which were increased in the 2022 budget.

In her report, council chief executive Ann Doherty said the Government rates waiver schemes introduced during Covid stopped earlier this year. She highlighted the cumulative 1.2% increase in commercial rates since 2009, far below the inflation rate over that period.

'Legacy of underfunding'

But Cork Chamber chief executive Conor Healy said businesses are picking up the tab for “a legacy of underfunding of city and county councils” by central Government.

“While rebate schemes will help, these increases will be a burden on many already challenged businesses,” he said. "The council needs to continue to invest significantly in economic development and marketing activities which would drive additional business to offset some of the impact.” 

Fianna Fáil councillor Sean Martin, chair of the council’s finance committee, defended the Government and said the council's budget in 2019 was €166m, and now stands at €268m, with Government grants increasing steadily in that time from €32m in 2019 to almost €91m this year.

However, Independent councillor Paudie Dineen described the rates hike as “an affront” to small businesses. Fellow Independent councillor Ken O’Flynn said it will likely have a devastating effect on many businesses.

Councillors were also told that new bike lanes and pedestrianisation have cost over 440 car parking spaces over the last three years, representing a significant loss in income to the city. 

Ms Doherty said the council will need to budget for substantially lower levels of parking income to fund future budgets.

Councillors are to get a debrief next month on the roadworks and traffic changes around the city centre amid complaints of rising congestion.

Motorists have blamed the congestion on works on the northern quays combined with changes to traffic flow associated with the regeneration of MacCurtain St to deliver bus, cycling, and pedestrian infrastructure.

The city council has said the existing road network cannot accommodate further increases in private cars and schemes to create effective bus services along with the continuing development of cycling and walking infrastructure are needed.