Rates regime must be overhauled

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The entire system by which revenue is raised from businesses through rates needs to be overhauled as a matter of urgency if small businesses across the country are to survive, according to Paul Connaughton T.D.

“Staff from the Valuation Office recently attended a meeting of the Public Accounts Committee, of which I am a member. At that meeting, members were told that a revaluation of rates has begun, but is only underway in Dublin and could take over ten years to be completed.

“Even more disappointing is the fact that when a rates revaluation is underway in an area, the net revenue from rates must remain the same, so if one business has its valuation reduced, a corresponding increase must be found.

“To date the revaluation has only involved three council districts in Dublin and at that rate a countrywide revaluation could take at least ten years. This simply isn’t good enough, at a time when businesses, big and small, are struggling desperately for survival. Year-on-year sales fell by an average of over six percent in the third quarter of 2011, coming on top of decreases of three and 5.94 percent experienced in the first and second quarters respectively.

“September 2011 was the 43rd consecutive month of sales decline. Electrical stores, furniture shops and ladies fashion boutiques have been particularly hard hit, with sales down between 7.5 and 8.5 percent. Grocery is now the best performing sector and even that sector recorded a decline of 3.5 percent in the recent figures.

“The declining volume of sales means that many small businesses are struggling to pay rent, rates and wages. While rates valuations are based on the size and location of the premises, recent CSO figures have shown that sales per square foot fell by 11 percent between the third quarter of 2010 and the third quarter of this year.”

“This reduction in retail sale productivity has to be reflected in a new rates regime if small businesses all over Ireland are to emerge from this current most difficult trading period. A number of reforms are urgently needed, firstly that of the current rates regime, then upward only rent reviews must also be tackled to ensure that small businesses have an opportunity to grow again,” concluded Deputy Connaughton.