Councils forced to write off €162m owed in business rates
Published 15/02/2012 | 05:00
CITY and county councils will this year refund or write off rates totalling €162m owed by struggling businesses.
The Irish Independent has learned that local authorities across the country do not expect to collect the money because companies have either gone out of business or cannot pay their debts.
The move comes as part of cost-cutting measures across councils, which are struggling to make ends meet.
Although writing off the debt will put pressure on their balance books, it also gives them a more realistic view of the state of their finances.
A report prepared by the County and City Managers Association for the Department of the Environment also shows that councils have made savings totalling almost €650m between 2008, when the boom started to implode, and February this year.
Of this, €236m comes from reduced payroll costs including non-replacement of staff, cuts in overtime and reductions in pay, while another €406m has been saved on goods and services.
The Financial Performance and Savings of the Local Authority Sector 2008-2012 report says that local authorities expect to take in almost €1.4bn in rates this year but have decided to write off €162m -- almost 12pc of everything owed -- because it cannot be collected.
This is partly because rates do not apply where a property is vacant, which has resulted in some businesses being entitled to a refund.
The second reason is there is an increase in the number of businesses owing money, which would have to be written off eventually.
Local authorities have been forced to take drastic measures to cut costs after swingeing cuts in their budgets in recent years.
Many councils continue to struggle, with some forced to rely on overdrafts and bank borrowings to meet day-to-day expenses.
Despite the crisis, some councils continue to haemorrhage cash, with a series of audit reports published by the Irish Independent earlier this week showing that rules on public-sector pay are being flouted, lucrative contracts are being awarded without being advertised and millions continue to be owed in uncollected levies.
But despite the continuing cash problems, the sector has made savings of almost €650m in the past four years.
The report shows:
• Spending on consultants has fallen by €23m.
• The amount paid for small contracts has fallen by €153m, with another €67m saved on materials.
• Travel and subsistence payments have fallen by €15m.
• Some €20m has been saved on advertising and legal fees.
• Almost 8,300 local authority staff have left since 2008, or 12pc. This is compared with staff reductions in the non-commercial state agencies (9pc), Defence (8pc), Justice (7pc), Civil Service (5pc), Health (5pc) and Education (2pc).
"A process of critical review of programmes and budgets has been undertaken within the sector," the report says.