Review of Commercial Rates

A new reserved function under the Local Government Reform Act 2014 conferred a power on Councillors to determine the proportion of refund of rates on vacant commercial premises that will apply in Local Electoral Areas.

Following lengthy consideration of the matter at a number of Corporate Policy Group Meetings and at the 2014 Budget Meeting, Councillors decided to continue with the system that has applied up to now with a 100% refund of rates being allowed, subject to the normal legislative criteria being met.

However Councillors made clear at the Budget Meetings that they would like to reconsider this matter in respect of the next financial year. In view of the financial implications for both the Council and ratepayers, it is considered appropriate to commence a review of the matter at this stage so that the appropriate levels of consultation can take place and a position paper agreed. Below is a recent report prepared by the Chief Executive of Fingal County Council and a review of rebates document prepared for the 2015 budget meeting.

REPORT TO CPG 2nd FEBRUARY 2015

Commercial Rates – Rebate Review Document Oct 2014

ANALYSIS OF VACANT PROPERTY BY CATEGORY AND AREA

 

Analysis of Vacant Properties      By Area

 

FINANCIAL IMPLICATIONS FOR COUNCIL

Any decision by Councillors to alter the proportion of the refund rate for the next financial year, would apply to properties that are vacant when the rate is made for 2016. It would not have a retrospective effect. The financial implications of a reduced refund rate cannot be quantified fully, but based on the data we have, it is possible to make the following assumptions based upon a 25% cut:

•Expenditure on refunds of rates would be reduced by up to €1.8m

• Income (i.e. the amount of rates we assess rather than amount we collect), would not change, as we assess rates fully on all properties valued, regardless of whether they are occupied or vacant

• Cash receipts should increase but not by the €1.8m referred to above, as many of the ratepayers in the €1 – €10,000 range will struggle to pay this charge

• Larger ratepayers (in the €50,000 – €500,000 band) are more likely to pay the 25% rates applicable

• Rates arrears are likely to increase (in the short/medium term at least) as we will not be able to process refunds (strike offs) for ratepayers who do not pay the 25% element.

• In the medium/longer term, we may have to make an increased provision for bad debts for rates.

The full impact of any change will not materialise until 2017 as it is at that stage vacancy claims for 2016 will be processed.