Large firms among those behind as Clare rates arrears hits €11.6m

THE Covid-19 pandemic has left it mark on Clare County Council’s coffers, writes Dan Danaher, following an 8.1% rise in the overall amount of uncollected commercial rates, which soared to €11.619 million on December 13 last.

Numerous businesses throughout the county were forced to either scale down their operations or close for extended periods due to Covid-19 restrictions in 2020 and 2021.

New figures obtained by the Clare Champion have revealed the rates arrears increased from €10.78 million at the end of 2017 to €11.619 million on December 13, 2021.

A buoyant local and national economy helped the overall rates arrears bill to fall to €10,465 million in 2018 and it fell again to €10.043 million in 2019.

However, the onset of the pandemic seems the most likely cause of an increase to €11.578 million in 2020 and €11.619 million in 2021.

The figures, which were released under the Freedom of Information Act, show one large business in the county owed €579,000 last December. Some of the other large debts include three customers in the €100,000 to €150,000 band of arrears hadn’t paid a total of €333,000 in rates. One customer in the €200,000 to €300,000 arrears band had an outstanding debt of €256,000.

At the other end of the arrears scale, 718 customers in the less than €1,500 band owed an estimated total of €439,000.

An estimated total of €495,000 was owed by 250 businesses in the less than €2,500 band, while 313 customers hadn’t paid the council a total of €1.11 million in rates in the €2,500 to €5,000
band and 157 customers in the €5,000 to €7,500 band had a total of €975,000 outstanding.

On December 13, 20211 1,818 customers owed a total of €11.6 million in estimated uncollected rates.

Ninety three customers owed between €7,500 and €10,000 amounting to an estimated total of €790,000, 167 customers owed sums ranging from €10,000 to €20,000 totalling an estimated €2,347,000, 96 customers owed sums ranging from €20,000 to €50,000 totalling an estimated

€2,788,000 while 17 customers owed sums ranging from €50,000 to €70,000 totalling €1,141,000.

When these are added together almost one fifth of the 1,818 owed €7.066 million or 61% of the €11.6 million.

The council took a different analysis of their own figures, pointing out that the business in arrears, as outlined in press query, between €7,500 and €100,000, represent less than 10% of overall commercial rate business.

In the period since 2008 recession, the council has billed €515.7m commercial rates, and their cumulated forecasted arrears at the end of 2021 are about 2% of total billing.

Chief executive, Pat Dowling recalled at a recent Budget meeting almost €50 million in business supports have been provided by the council to local firms over the previous 21 months.

Councillor Johnny Flynn said it is important to ascertain how much of the uncollected commercial rates is historical debt from the economic crash in 2008 that businesses are still trying to work their way out of.

He said some of this outstanding commercial rates debt may be uncollectable because businesses may have gone into liquidation.

With one sixth of the properties owing between €7,500 and €100,000, Councillor Flynn said this seemed to be the problematic area.

He said any business to have a rateable valuation between €7,500 and €100,000 are significant businesses.

“I have huge concerns if there are businesses operating who can pay commercial rates but will not pay them enjoying a commercial advantage over compliant businesses who are paying their rates.
Commercial rates help fund essential public services such lighting, street cleaning, upgrading of footpaths and other works.

“It is very unfair if you have one business paying their rates and another business on the same street not paying their rates.

“There is a big difference between businesses who will not pay and those who can’t afford to pay. If there are businesses who can pay but are not paying, I would be concerned they are getting a huge commercial advantage against competitors who are paying.”

“It would be useful to understand are a lot of the uncollected rates historical debts that occurred during the economic crash of 2008, which went on until the best part of a decade, and are businesses people still paying their way out of it.

“The publication of businesses who are in default would need to be considered if there are people who are “gaming” the system, particularly for those who can pay but will not pay.”

With the abolition of domestic and agricultural rates, Councillor Flynn recalled this undermined the financial strength of local government.

He pointed out commercial rates and the Local Property Tax were the only financial mechanisms a local authority has to raise substantial sums of money.

Following the factoring in of uncollected rates in the overall budget, he said compliant ratepayers are paying more than they should be.

“If everyone paid their commercial rates, it would reduce the commercial rate significantly”.

In total, 3,430 occupied properties generated €37.2 million in commercial property rates in 2021. Ten levied properties pay more than €20 million. This income comes from energy generation plants, wind farms, global utility networks, national retailers and large industry. The balance of about €17 million is levied across 96% of properties in the county.

While income from extra properties or new builds will generate an extra €1.15 million, this is offset by the delisting for commercial rates of the Roche plant in Clarecastle, a loss of €0.7 million; the successful application by ESB Networks on their global valuation, a loss of €62,000 and the delisting of other properties across the county where they are converted to domestic use.

In its FOI response, the council stated out of the total of 3,761 customer accounts, more than 52% have cleared their balance or are in credit.

A further 25% owe less than €2,500 that amounts to 968 customers bringing this to 77% of all their customers who are broadly compliant.

“There are a number of customers in agreed payment plans. The council continues to work with all customers to agree payment arrangements.

“Legal proceedings stood down in the early stages of Covid-19 have been reopened and initiated on a case-by-case basis where there is no meaningful engagement from the customer.”

Responding to queries, the council stated commercial rates are the main source of funding for the provision of services.

The council has a 87% collection rate, with €8.70 out of every €10 is deemed collected.

Where customers are not engaging either due to no ability to pay or otherwise the council does invoke legal proceedings.

The total number of active commercial rate customers is 3,761. There are 1,943 customers that are fully paid in December 2021. When analysing the collection of rates, the council stated it is important to review the rate book in its totality.