The issue of commercial rates is a complex one, but one that must be addressed by the Coalition Government. There are three aspects as I see it to what must be done. Firstly reductions in rates must be targeted at the small and medium sector that is currently under pressure. Pat Rabbitte said in a recent interview that the retail economy is flat as a pancake. This acknowledgment should be enough for the government to allow local authorities to reduce rates for smaller businesses without having to reduce rates for the large multinational corporations and discount food stores that are not feeling the strain of the economic downturn. At the moment local authorities can only give a general, across the board rate reduction that obviously gives greater relief to those who can afford to pay the, with little benefit to those who pay a smaller rate bill but are under greater pressure.
To encourage local commercial activity the government must secondly give local authorities the flexibility to prioritise businesses and areas within towns that are seen as desirable for growth. For instance if a town does not have a certain retail unit but would benefit from one opening up, the local authority should be able to incentivise someone to open such a business by giving a rate reduction over a specified period of time. Similarly if a street or area is especially affected by closing businesses and derelict properties, a local authority should be able to give incentives through the rating system for new businesses willing to open there. The existing rule that owed rates stay with a property for two years also needs to be reviewed as it disincentives new businesses from opening in a vacant building where rates are owed.
The third issue that is central to the rates debate, and one which councillors often ignore, is how the lost funding will be made up if there are changes made to the rating system. Cork County Council currently collects about €90 million annually in commercial rates. Any of the reforms I have mentioned will help struggling small and medium enterprises, but will come at a cost to local authorities such as Cork County Council. Added to this is the continuing decline in revenue from central government. It is obvious that a new stream of revenue will have to be devised if local services such as roads, water, sewerage, and amenities are to be maintained to the highest level. In the late 1970s domestic rates were abolished in a populist but short sighted move. This must be reversed. The announcement by the Minister for the Environment and Local Government, Phil Hogan T.D., that a new domestic charge of €100 is to be introduced, is the first move in what is a necessary rebalancing of the financing of local authorities. Everyone should make a contribution to the provision of local services. This should be based on income as well as the property portfolio of individuals. The decision to exempt everyone living in social housing was unnecessary and should be reversed when the full system is introduced in January 2014. Water rates will also have to be introduced and should apply to everyone. It is only when we have an equitable system of funding local authorities that businesses will be able to be released from the burden of carrying the can for everyone.