Retail Ireland, the Ibec group that represents the retail sector, today launched a new policy paper entitled ‘Tackling the rates burden’.
The paper highlights the serious deficiencies in the current system governing how local authority rates are levied and collected from retailers, resulting in over €200 million in uncollected rates each year. The retail sector is calling for a break in the link between rents and rates, which has led to many retailers paying disproportionate costs due to the prevalence of upward only rent reviews. Instead they want the Government to prioritise reform of the current system through the introduction of a new Rates Valuation Bill before the end of 2017.
Thomas Burke, Director of Retail Ireland stated: "Local authority rates make up a significant portion of total input costs for Irish retailers. The current system is opaque, inconsistent, inefficient and expensive to operate. Irish retailers are willing to pay their share in order to help improve local services, however the current system is wasteful and places an undue cost burden on retailers. Retailers have seen a significant increase in rates in recent years with very little return in terms of new service provision. This is of particular concern as retailers feel the pressure of rising costs across a range of other inputs such as labour, rent and utilities. This is leading to a general erosion of the sectors' competitiveness.
"Under the current system, retailers who operate on a nationwide basis have to deal with 31 local authorities, all with radically different operating systems. This is in addition to recent increases in individual rates bills, which are running into the hundreds of percent in some cases, making it extremely difficult for retailers to build business plans and make multi annual investment decisions. The current system deters investment and places the burden of funding local government solely on the shoulders of retailers that operate bricks and mortar outlets, putting them at an extreme disadvantage to online-only retailers."
Retail Ireland recommends that the new system should:
1. Introduce a centralised collection process
· Give the Office of the Revenue Commissioners responsibility for the collection of commercial rates
2. Stop linking rates to rents
· The methodologies used to calculate commercial rates needs to be reformed
3. Reform the revaluation system
· The current system is opaque and discourages further investment in the regions
4. Progress on local government reform
· Efforts at local government reform should be redoubled to give certainty to retailers
5. Increase local property tax intake
· Increased revenue from the local property tax should be used to ensure our town centres and city centres are revitalised and regenerated as thriving, exciting places to live, visit and spend time
Mr Burke continued, "The Irish retail sector is a driving force in the Irish economy employing over 280,000 people in every town and village across the country. The sector is also the biggest contributor to the Irish exchequer, generating 23% of total tax receipts in Ireland. Urgent action is needed to address the threat to the sector's competitiveness posed by the current dysfunctional local authority rates system if we are to maintain retail’s key economic and social role in Irish society."