Monday 26 September 2016

Local authorities wrote off or waived €201m of commercial rates in just one year

Two thirds of local authorities are operating in the red and are reliant on overdrafts and loans

Published 15/05/2016 | 02:30

In 2014, Dublin City Council followed by Kildare reported the highest amount of write-offs and waivers, at €34m and €16m respectively, the report found.
In 2014, Dublin City Council followed by Kildare reported the highest amount of write-offs and waivers, at €34m and €16m respectively, the report found.

Local authorities wrote off or waived €201m worth of unpaid commercial rates in one year.

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Commercial rates are taxes paid by businesses to fund local services. They are supposed to generate around one third of a local authority's income.

The write-offs and waivers are contained in a recently published report by a local government oversight body, which also reveals that some local authorities are much worse than others at collecting commercial rates.

In 2014, Dublin City Council followed by Kildare reported the highest amount of write-offs and waivers, at €34m and €16m respectively, the report found.

Their large size relative to other authorities would have contributed this.

In total Ireland's local authorities are owed around €340m in unpaid rates, according to the National Oversight and Audit Commission.

NOAC previously warned that two thirds of local authorities are operating in the red and reliant on bank overdrafts and borrowings to make ends meet.

NOAC was established in July 2014 and is charged with scrutinising the performance of local authorities and helping to develop best practice.

Local authorities with poor track records at collecting rates were identified in its April report which looked at 2013 and 2014 performance. Frequent changes of company identities and the high volume of small ratepayers (a quarter pay less than €5,000) were identified as obstacles to collecting rates.

Louth should have collected a total of about €42m in rates in 2014, according to the report. In practice it collected €23m, 56pc of the total, and wrote off or waived around €15m in bad debts. Donegal County Council similarly collected 56pc of the total rates owed to it in 2014 and wrote off or waived around €8m.

NOAC noted that dissolved town and borough councils were incorporated into Louth and Donegal county councils in 2014, bringing substantial rate collection arrears with them.

Limerick, Monaghan and Leitrim collected 64, 63 and 60pc of the total rates due to them respectively.

All local authorities have revised their debt management and credit control policies since 2014 and improvements are expected in 2016.

James Treacy, managing director of StubbsGazette, said most local authorities need to do more to address unpaid rates.

"Aside from the unacceptably high level of arrears and write-offs, what is perhaps even more disturbing is that local authorities have been negligent in deploying all of the avenues open to them to improve performance, as evidenced by the extraordinarily variable performance of individual authorities that seems to be directly correlated with collections practices.

"The NOAC report discloses that some €340m in unpaid commercial rates is owed to more than 30 local authorities up and down the land.

"This at a time when government subvention of local authorities is under increasing threat, seriously compromising the quality of local services such as water, sewage, parks and other amenities. In the case of the seven worst performers, the percentage of the total rates due collected in 2014 ranged from just 56 to 67pc."

"Given that commercial rates account for some 32pc of local authority income, the failure of local authorities to collect what is due to them is all the more extraordinary.

"The fact is that by applying some systematic, best practice debt collection procedures, a substantial proportion of these sums owing is retrievable."

Data prepared by StubbsGazette for the Sunday Independent shows that some local authorities have pursued unpaid rates aggressively through the courts in recent months.

A smattering of county councils have registered judgments worth a combined €10m since the beginning of 2014 in pursuit of businesses who have not pay rates.

Registering a judgment publicises the debt, making it harder for the company owing the money to borrow.

Fingal County Council registered 481 judgments against debtors since January 2014, according to research by StubbsGazette. The average value of the judgments registered by Fingal was €6,369.

South Dublin was in second place, registering 428 judgments since the start of last year. Average award size in 2016 was €6,992.

Other local authorities who have registered debts through the courts in recent months include Carlow (18 so far this year), Offaly (six in 2016) and Dun Laoghaire Rathdown (10).

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