Fine Gael TD for Galway West & Mayo South

Valuation (Amendment) (No. 2) Bill 2012: Second Stage Speech

I welcome the opportunity to speak on this Bill. It has been coming through the Oireachtas for some time. Obviously the issue of commercial rates is one that is very familiar to anybody who has served on a local authority. As a former member of a local authority for eight years, I found it was a constant source of debate and was very topical in recent years.

The Bill modifies the existing system, but there is a valid argument for replacing it with a new system. The difficulty that arises is how we define and draw up a new system. We will always have people who will be winners and losers. People who would be for or against this would find a new system equally problematic and therein lies the problem. Many Members have called for a new system. It is clear that the current system is not properly equipped. Under the 2001 Bill, the last major legislation on this area, it was envisaged that there would a ten-year cycle of valuations, but ten years is a long time, as highlighted by Deputy Wallace.

The process started in 2005. Even during a period shorter than ten years, economies rise and fall and there are good times and bad times. A valuation could be made, the economy could plummet the following year, and by the time it rose again one could be in the next valuation period. In the meantime, a business could be significantly affected.

The current system has problems. Only three counties have started the process, and only two have completed it, I believe. When the process begins, some will benefit and others will lose, but I understand the overall amount collected in a county will remain the same.

I understand that while there are now 120 valuation staff in the office, there used to be 150. It is quite clear that there is a resourcing issue. Local authorities rely on commercial rates. The Government has broadened the tax base and introduced the local property tax as an alternative source of income. It is to be hoped that, over time, this will allow the burden on businesses to be alleviated.

The Bill has many positive measures. It will simplify the processes, remove the appeal to the commissioner and allow appeals to be dealt with by the valuation tribunal. However, it can only deal with a small number of hearings at any one time, which means it must be properly resourced.

Section 6 allows for the appointment of non-valuation office personnel to carry out valuations. It is to be hoped this will minimise delays, but we need to ensure there is consistency within the Valuation Office and across the country. Section 7 permits the publication of a new list of valuations before they come into effect. This will allow people the time to query them and submit appeals. Section 11 provides for the insertion of section 5A, which deals with self-assessment and simplifies the process of administration of valuations, rather than altering the system. Section 22 allows the commissioner to direct the manner in which the net annual value of relevant properties may be estimated.

Overall, I welcome the approach taken. However, as a former councillor I found the only power I had was to increase or reduce the annual rate of valuation, which is a function of councillors. The best international practice takes account of the net annual value or rental value of a property. Pubs, hotels and service stations are valued by reference to the trading data associated with property in that sector.

I am sure this is debated at local authority meetings up and down the country during budget time. We never had the power in law to reduce the net rate for small corner shops or businesses, as compared to large multiples. The attractiveness of being able to reduce rates meant that the larger companies, such as an energy provider which was the largest ratepayer in our county, did not ask for or need a rate reduction. If we had reduced rates for a small corner shop, they would also have been reduced for larger businesses.

Flexibility needs to be given at some stage. That is probably fraught with problems and difficulties, but such an approach is not available under the current law. The law needs to be addressed so that elected members can target benefits to smaller traders and retailers to give them a lifeline in times of recession.