Business rates up 50% in last decade

RATES PAID by businesses to the State’s 88 local authorities have increased by almost 50 per cent over the last decade, according to the latest figures from city, county, town and borough councils.

While almost all local authorities have either reduced their commercial rates this year or held them at 2010 levels, most councils are still charging businesses higher rates in 2011 than they did at the height of the boom in 2007.

A request in 2008 from then minister for environment John Gormley for local authorities to “exercise restraint” did result in a stabilisation of rates. While the profits earned by business have dwindled in the past three years, changes in rates have been marginal. Fewer than half of the local authorities lowered their rates this year, with just 33 striking a lower rate than in 2010. When those reductions are calculated, the average decrease in rates was just 0.6 of a per cent in 2011.

The slight reductions in rates in recent years follow a decade of steadily increasing charges for businesses. Since 2000, rates to local authorities have risen by an average of just under 47 per cent.

Seán Murphy, deputy chief executive of Chambers Ireland, acknowledged local authorities were working to contain their costs, but said the recent small adjustment in rates did not compensate for the effect of the recession on businesses in any meaningful way. “Keeping rates steady is not enough. Rates can’t stay where they are when the economy has shrunk so considerably. We need far greater reductions.”

Annual adjustments to commercial rates were not the substantive issue, Mr Murphy said. For the burden on struggling businesses to be relieved, the rates base would have to be broadened with the introduction of property and water taxes for homeowners.

Patricia Callan, director of the Small Firms Association, said the rates system was unfair and needed to be overhauled.

“There should be a move towards people paying specifically for the services they are getting rather than having what is a tax on businesses as a whole,” she said.