8 February 2016
By Tom Collins
With the general election campaign underway, Ibec Cork, the group that represents business in the region, called for an overhaul of Ireland’s commercial rates system. The next government must prioritise the reform of local authority funding because local authorities do not have the power to do so.
Local business is the primary source of income of the city and county councils in the Cork. Every year, businesses contribute 43% of the total local government budget. This puts increased pressure on business in the region. According to Ibec research, a new approach to commercial rates could yield an additional €1.2 billion over the lifetime of the next government. This could be used to finance a rebalancing of the entire local government funding model.
Ibec is calling on the next government to overhaul the commercial rates system by:
· Giving responsibility to the Revenue Commissioners to collect commercial rates because it’s more efficient and has significantly higher rates of collection
· Replacing the archaic commercial rates system with a simple and transparent site value tax
· Redoubling the local government reform agenda with the objective of delivering more efficient and effective services that bring consistent value
Ibec Cork Regional Director Peter O’Shaughnessy said: “Local authorities are increasingly looking to business to balance their books. This is not sustainable. The largest source of council funding comes from business, not central government and not through the local property tax system. A tax on business is a tax on employment. Business contributions currently account for 43% of Cork’s combined local government budget.
“Let’s call time on the rates system that can trace its roots back to 1826. It is simply too expensive and inefficient to operate. A centralised approach to collections could yield €1.2 billion over the lifetime of the next government. This could be used to improve services and support reductions in rates paid. Rebalancing the burden of commercial rates would support job creation in the region, particularly in the SME community. It will be up to the next government to make this happen,” concluded Mr O’Shaughnessy.