Link rates to profits, not premises size, says new councillor

RATES and their impact on small and family-run businesses were in the spotlight at the January meeting of the local authority with Clare’s newest county councillor called for their reform. 

Tabling his first motion since being coopted to the local authority, Councillor Tom O’Callaghan called on the Minister for Housing, Local Government and Heritage to amend the Valuation Act to ensure rates are based on the profits a business makes, rather than the size of its premises. He urged that this be done before the revaluation process, currently being conducted, becomes effective from January of next year. 

“I believe very strongly our focus needs to be on protecting the viability of the small to medium family-run business, through County Clare, especially in the heart of our towns and our rural villages,” he told the chamber. “Any support, reduce costs is needed and very much appreciated.”

The Ennis district member outlined the spiralling costs of credit for small businesses and highlighted initiatives taken in Germany to support small firms there. He added that positive developments for Ennis would be further enhanced if businesses could receive some relief on rates.

“I see the NTA has a very progressive plan being put forward with new two new bus routes, hopefully to be completed by the first quarter, quarter 2025,” he said. “But if we do not help the existing businesses right now, my biggest concern is that there’ll be no succession of those small businesses.”

The motion was supported by Councillor PJ Kelly, who said it showed a “common sense approach”. He noted that legislation on rates dates back to British valuation laws and that the system needed to be reformed in order “to attract people to come in the local community”.

Councillor Johnny Flynn spoke of his own experience of starting out at the age of 14 “working for a family business for a pound a day as vegetable boy in a supermarket”. He said the experience was the best training he ever received. “Paying commercial rates based on profit, rather than somebody’s perception of floor areas value would be very sensible,” he said.

Councillor Gerry Flynn noted that valuations they can be very problematic for a lot of small businesses. “I support the referral of this motion to the minister for a speedy response,” he said. 

Councillor Ian Lynch noted that in Kilrush there are two large supermarkets with more turnover and profit than the rest of the town put together. “I think needs to be looked at, to make sure we can actually be serious about making sure towns or villages survive,” he said.

Councillor Shane Talty noted that family-run small businesses offer important services to communities, but can be limited in terms of profitability. “The message from the Valuation Office is that if we could get you off the field, we’ll get a more profitable business in there to pay these higher rates based on this notional rental yield,” he said.

“I don’t think it was ever an intention of any genuine representative at local or national level but that will be the outcome of the of the revaluation exercise. I’d be very fearful of the outcome next year.”

Councillor John Crowe outlined how small businesses had taken on extra costs and activities in the Celtic Tiger era. “It is so important that the rates are based on the profit margin,” he said. “Because in rural retail, your profit margins wouldn’t be massive and trying to keep the door open is very difficult for a lot of traders.”

Councillor Pat McMahon said reforming rates was essential to support businesses that were being “absolutely decimated”. 

The motion was also commended by Councillor PJ Ryan who said it should be a straightforward matter to base rates on profitability. “It is only an exercise between departments to assess the kind of profit that the business is making,” he said. 

Councillor Mary Howard noted similar motions over the years and the fact that the existing legislation dates back around 200 years. “I think it’s very important that we do everything we can in our power to ensure that these businesses continue because they are the backbone of our local economies,” she said. 

That view was shared by Councillor Pat Daly. “Revaluation needs to get the balance right,” he said.

A “geographic imbalance” was highlighted by Councillor Pat Hayes. “I think it needs to be based on the the turnover, so I fully support this motion,” he said. 

Councillors Joe Killeen and Gabriel Keating also spoke in support of the motion, as did Cathaoirleach, Councillor Tony O’Brien.

Chief Executive Pat Dowling said he would be inviting staff of the Valuation Office to address the chamber on the matter. He noted that the revaluation process was set to be income neutral for local authorities. “I don’t have to tell all of you the importance of commercial rates, to be able to run Clare County Council,” he said.

“That’s very important, while at the same time modernising the legislation so that it’s an equitable way of raising money from businesses, particularly small business.”