Few tears will be shed at the demise of the current law on commercial and industrial property rates when new legislation is introduced in November.

The law, which dates from the middle of the last century, is to be completely redrafted in a new Valuation Bill due to be introduced by the Minister of State for Finance, Mr Martin Cullen.

Once described by Mr Justice Declan Costello as "a continuing mosaic of partially repealed and imperfectly drafted Victorian statutes, encrusted with a century-and-a-half's judicial decisions", it has fallen into some disrepute.

Aside from the difficulty in understanding how the actual rate charge is arrived at, ratepayers say the current situation allows for little consistency. "You would find two similarly sized premises on the same street paying a different rate," says Mr Malcolm Byrne, a research officer with the Chambers of Commerce of Ireland.

The current system is "inherently, seriously flawed," says a draft report, Rates - An Unjust Tax, prepared by consulting firm Dr Con Power Business Consultants for the Small Firms' Association. Citing problems with its "technical basis relative to modern circumstances, the parameters of the valuation which are used, and in. . . the inequalities to which the system inevitably gives rise", the report says the system cannot, by its very nature, claim to be scientific or objective.

"The business community is, therefore, faced with a very unsatisfactory situation where it is not possible. . . to make a definitive objective valuation of a building."

Inflation was not an issue in 1852, when the present valuation system was introduced in the Valuation (Ireland) Act. The system worked well until the 1910s, when inflation first affected property values in Ireland. Attempts since then to account for price rises led to a complicated procedure for assessing property under the core legislation of the 1850s.

Easy it is not. Even the Valuation Office, the State body charged with carrying out rating valuation, admits that the system "is antiquated and difficult to understand and administer". Small surprise then that the Minister of State, Mr Cullen, should say that "it is long past time that it should be replaced".

Such is the antiquity of the system, that "rateable values" - the figure multiplied by the "rate in the pound" struck by local authorities to determine the fee to be paid to the authority - have a distinct air of unreality. "Values in provincial towns are generally less than £100 [€127]; it's rare to see anything over £1,000 elsewhere," said an expert. In effect, these figures reflect an attempt to represent a value for the property comparable to that in the 1850s and 1860s. As Mr Cullen explained at a series of public meetings during the summer, "no national revaluation has taken place since the national valuation of all property in Ireland, which was done between 1852 and 1865".

The current system works as follows: Valuation Office valuers take the rental value of a property, £100,000 in central Dublin in this example, and use it to estimate rental value for the property as per market prices in November 1988, say £50,000. To derive a value comparable figure to that of the 1850s, this £50,000 is multiplied by a standard figure, in cities, of 0.0063 - or 0.005 in rural areas - to derive the "rateable value", £315 in this example. This £315 is multiplied by the "rate in the pound" struck at local authority level - £38.80 in Dublin Corporation this year - to arrive at the rate which is to be paid to the local authority, £12,222 in this example. Sample revaluations took place in November 1988 and the standard figures of 0.0063 and 0.005 are used to claw back estimated 1988 values to those of the last century.

"In the new scenario, there'll be no need to reduce the figure," said a source familiar with the workings of the Bill.

The sample lease value of £100,000 will be the "rateable value". This means that the "rate in the pound" struck by local authorities will have to be reduced significantly, if the Bill, as Mr Cullen puts it, "is not to allow for a windfall for any local authority".

While commercial rates paid by companies have increased by more than 50 per cent since 1990, Mr Cullen says he does not want to see this rise when the new Bill in introduced. He intends to include a provision in the Bill to cap the rate so that there would be no year-on-year increase. The thinking is that this should ease fears in the business community that local authorities would use the changeover to the new system to impose rate increases.

All commercial and industrial property in the State will be revalued once the Bill becomes law. This would allow "an uniform and equitable base to be established and anomalies to be removed", said Mr Cullen this week. The process will take about five years. From then, "there'll be a rolling national revaluation no more than every seven years". Thus will the "rateable value" eventually reflect the true market worth - and performance - of every property in the State.

While Mr Cullen says the revaluation may be carried out in "big swathes of areas, maybe regions", the Society of Chartered Surveyors has called for a State-wide revaluation to be carried out in a single period, not on an area-by-area basis over five years. "We feel this is an anomalous situation at the moment and if you start doing revaluations by district you perpetuate the anomalies," said a spokesman for the society, Mr Des Killen of Donal O Buachalla & Co.

"This is the first chance in 150 years to get it right. We feel that the Government should not baulk at the challenge."

There will be winners and losers after the revaluation.

An expert with a knowledge of the new system suggested that occupiers of modern, well-placed office buildings would be likely to be hit with an increased rate bill under the new system. "In 1988, the office market was relatively weak," he said, adding that it was possible that substantial rent increases in the market since 1988 might not have been accounted for in the rates paid in recent years.

Amongst those who might expect to pay a reduced rate bill were those leasing "categories of properties at locations that haven't had the same sort of levels of rental growth since 1988". The expert suggested that ratepayers renting retail units in secondary streets - off main shopping streets - and in suburban areas might rank among this group. Equally, the owners of run-down or derelict buildings might pay less rates under the new system.

The ultimate object of the Bill is for ratepayers to pay the same amount. "If the retail market is lower and offices are pushing ahead the rates should reflect that," said the expert. "Rating as a tax is about relativity and equity."

In theory, the new system will reflect changes in the valuation of properties with periodic Statewide revaluations. Where the occupier of a property extends or improves their share of a building between revaluations - or in the case of dereliction or demolition - the Valuation Office will revise the "rateable value" before the next revaluation.

The chairman of the valuation and legislation committee at the Irish Auctioneers and Valuers Association, Mr Paul Good, expressed concern about the provision for powers of discovery he believed would be included under the Bill. "I think they're being a bit pushy about it," he said.

Other proposals designed "to make the system more transparent and equitable for the ratepayer" are included in the Bill. According to Mr Cullen, "it is proposed to provide ratepayers with clear and simple information as to how their valuation is calculated".

"Ratepayers will be notified of the Valuation Office's proposed valuation before [Minster's emphasis] it becomes effective for rating purposes.

"Under the current system a ratepayer or rating authority can appeal a determination by the Valuation Office, firstly to the Commissioner of Valuation, and secondly to the Valuation Tribunal after [Minister's emphasis] it has come into effect. This facility will continue in addition to giving ratepayers an opportunity to make a submission to the Valuation Office, if they wish, about the valuation."

Mr Cullen said he was confident the Bill would become law early in the new year at the latest. "There's a shift in emphasis from where the authorities were the gods, to putting the ratepayer at the centre of the valuation process. It really is about bringing the ratepayer in from the cold," he adds. Time will tell.