Business still burdened with boom-time rates

IBEC, the group that represents Irish business, published a comprehensive new review of commercial rates and water charges across the country, which found that businesses continue to pay boom time rates, despite the fact that many remain under intense financial pressure. The report highlights a continuing divergence in the cost of water charges across different local authority areas, with businesses in Wicklow paying the most, at €3.03 per m3 of water, and businesses in Kildare paying the least, at €1.59 per m3 of water.

The report, ‘Addressing the challenge of local authority costs’, [pdf,1.07MB ] found that this year just one local authority decreased its water and waste water charges, but nine imposed increases ranging from 3% to 11%. Almost all authorities are charging substantially more than they did in 2007. While no local authority increased Annual Rates on Valuation (ARV) this year, the cost to business remains too high. In contrast to other sectors of the economy, local authorities have failed to adequately respond to the radically changed economic environment of recent years.

IBEC’s Head of Energy and Environment Policy Neil Walker said: “Business pays €1.4 billion every year in commercial rates and a further €200 million in water charges. Companies operating in the domestic economy have seen turnover fall by 25% in recent years, but this has not been reflected in local charges. Local authorities need to reduce their costs and pass on the savings.

“Water charges are rising in many areas, but it is not clear how much, if any, of the extra money is being invested in the water service. The current system lacks transparency and accountability. It is crucial that the planned transition to Irish Water does not lead to further increases for commercial users. The regulator must ensure that ongoing reforms do not undermine the ability of businesses to survive, compete and create jobs.

“It is a challenge for local authorities to provide a quality service with limited financial resources, but more savings are needed. A revenue-neutral revaluation process is underway, but this has already led to some companies being quoted significantly higher commercial rates for next year. This risks undermining the competitiveness of the Irish business environment. The aim must be to reduce commercial rates across the board. We need to encourage investment and activity in the domestic economy if we are to lift domestic demand and drive sustainable growth.”

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