Commercial rates burden 'unsustainable', warns Ibec
IBEC has called for a national reform of commercial rates collection along Local Property Tax lines and says the Government's rates reform bill primarily helps local authorities, not businesses.
The lobbying group said yesterday that rates are rising and, this year, would mean that local businesses provide €1.55bn, or 34pc, of funds available to local authorities - 14pc higher than a decade ago and far more than central Government provides.
In a policy briefing published to coincide with Oireachtas committee stage consideration of the Local Government (Rates) Bill, Ibec said the current regime of taxation "mostly funds services that businesses do not consume."
"Local authorities use business to balance their books," it said. "Business picks up the tab for any expenditure gaps or funding shortfalls that arise in their annual budgets.
"Reductions in central government contributions and other revenue sources have resulted in local authorities becoming ever more reliant on local business for their revenue. This is not sustainable."
The briefing document illustrated the chasm of commercial rates funding between urban and rural Ireland. While businesses fund more than half of local authorities' entire budgets in Fingal and South Dublin, and nearly that much in Dun Laoghaire-Rathdown and Galway City, local authorities in Leitrim, Longford, Laois and Tipperary receive less than 20pc of funding from business.
Aidan Sweeney, lead author of the briefing document and Ibec's senior executive for government and regulatory affairs, said the Government should develop "a centralised or shared service collection model like the Local Property Tax system."
He said the Government bill "does not go far enough".
"The revaluation process must be scrutinised including costs and timelines which are far too slow."
Mr Sweeney said in the longer term, it would make better sense for local authorities to shift the model of taxation away from commercial rates and LPT to "a site or land-value tax".
The Local Government (Rates) Bill seeks to make rates collection more effective, with new powers to pursue unpaid debts, slap attachment orders on earnings, assets and bank accounts, and apply interest and penalties on late payments.
The bill would introduce new flexible payment options and give local authorities new powers to discount or waive rates on specific businesses to promote development.
Mr Sweeney welcomed the potential for such incentive schemes - but warned that such powers could prove "highly discriminatory" in practice.
Waiving rates for certain businesses, he said, "must be properly budgeted for and not crudely fall on remaining ratepayers in the locality. Local businesses should be consulted over the development of new incentive schemes."
The Ibec document called for the Valuation Office to hire external contractors and permit self-assessment - akin to LPT - to relieve "considerable delays in valuing new and altered property" that cost authorities an estimated €25m annually.
It contrasted Revenue's 97.5pc LPT collection record with local authorities' struggle to collect even 80pc of rates due.
Centralising responsibility for collections, it argued, would cut administration costs by two-thirds and hike collections to 90pc.