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Councils forced into legal action over unpaid rates bills

COUNCILS are bringing small businesses to court for as little as €5,000 in unpaid rates, an Irish Independent investigation reveals.

The majority of councils who responded to a series of queries relating to their finances confirmed they have begun legal proceedings against firms who have failed to pay their rates.

Local authorities are themselves in the grip of a deepening cash crisis just to provide basic local services.

They have already cut staff and reduced expenditure because of massive reductions in the Local Government Fund.

However, many small firms say they now cannot afford to pay the rates and urged local authorities to cut or postpone the payments.

Business owners said rates -- on top of a hike in the social charge for the self-employed -- means many of them will have to shut up shop for good.

Our survey of the country's local authorities reveals the extent of the funding crisis.

Louth County Council and Limerick City Council were the only two local authorities out of 34 who failed to return queries for information on rates.

Our research shows:

  • Three local authorities in Dublin are owed over €66m in unpaid rates.
  • Twenty-five local authorities are owed more than €155m.
  • On average, councils recoup only 80pc of commercial rates owed.
  • Street cleaning, upkeep of parks and libraries are under threat.
  • Councils admit they may not be able to pay suppliers in 2011.
  • Many local authorities claim they cannot afford to "slash" rates because of the cutbacks in funding from Government.

Local authorities across the country vary in their approach to claw back the money owed. Some councils are sitting down with businesses and agreeing to deferred payments. However, others are not open to negotiations.

Kerry County Council discusses options with businesses about making payments. But they admit the legal route is now more common to recover rates. "2010 has proved most challenging for the collection of rates and there has been an increase in legal proceedings in this area," a spokesman said.

Dublin City Council has announced the biggest decrease in rates so far for 2011 -- at 6pc. The closest to follow their lead is Donegal County Council at 3.5pc. It revealed it would negotiate with businesses who had cash-flow problems.

In Kildare rates were frozen in 2010 but they were reduced by 2pc for this year.

The council said cutting rates further was "not viable" as rates account for 31pc of its income.

The Small Firms Association (SFA) has called for a "drastic" reduction in commercial rates to prevent businesses from going under.

One small business told the Irish Independent they were dreading the prospect of being brought to court over a €5,000 debt.

"We want to pay our bill but we have to prioritise who we pay and right now the staff's wages are barely being met. They have to be paid first, then the rent and then the council.

"We were worried about a letter from the council over rates last week and now this week it's the Finance Bill. There's just no incentive to stay in business anymore, we're getting crippled everywhere we turn."

The Irish Small and Medium Enterprises Association (ISME) urged councils not to go down the legal route.

"The final straw there is that you put the company into liquidation, which is a lose-lose situation on all sides, so there needs to be a pragmatic approach taken to the collection of rates," chief executive Mark Fielding said.

Irish Independent