Local Authorities must cut commercial rates

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It's time to start applying pressure to this Government to do something about the crippling cost base inhibiting any chance of economic recovery



11 September 2009

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This month Retail Ireland’s Torlach Denihan has written to the Taoiseach and to the leaders of the opposition parties asking that their councillors vote to reduce commercial rates by at least 20% when local authorities vote on it this autumn. All things considered, a 20% reduction isn’t nearly enough. As Denihan pointed out, not only have rates moved in just one direction for the last nine years – up, by a cumulative 57% across the country – some local authorities elected late last year to increase rates even further, just as the economy was taking a nose dive.

The valuation on commercial properties at present reflects property values at the height of the boom, and more in some cases: Clare, Wexford, Dublin City, South Dublin and Fingal, where rates were increased in 2008. And lets not forget that if the property holds an off-licence, whether you’re Tesco in Clarehall or an 800 sq ft shop in Clonmany, that valuation is summarily increased by a further €10,000 for the purposes of calculating local commercial rates.

We are in a situation where businesses are being squeezed on the one hand by a serious contraction in consumer spending, thanks to a deep and pervasive recession, and then squeezed on the other by ludicrously high costs under state control. As the Government is preparing to ask us to accept a package that will pump billions of our tax money into the banks that broke the country – to bail out the developers whose over-borrowing and over-spending they financed – with all of the risk and all of the burden falling on us, it seems they also expect us to accept that they are politically unable, or unwilling, to address the areas of the economy that are crippling real businesses and making economic recovery impossible.

We cannot become dynamic and competitive again until our costs come down. Retailers and suppliers throughout the country have cut their prices and their margins, they’ve done everything they could and reacted as quickly as possible, and the Government has left them out in the cold. When the JLC brought the hammer down this April to force through the third instalment of the wage increases agreed for the retail sector in 2007, the Government had no political will to intervene, even when workers themselves were able to recognise that jobs were on the line.

The minimum wage in Ireland for workers over 22 is €8.65 an hour, or €9.66 under the JLC agreed rates for retail workers. In the UK it’s £6.58 (€7.50), just about 30% lower than in the Republic of Ireland, and that’s not even taking into account the JLC’s mandatory Sunday premium.

The imbalances between us and our competitors must be addressed; it’s time for the Government to step up and even the playing the field. It must make the cuts necessary in the interests of business and in the interests of the economy. Real businesses providing real employment is what this country needs to get back on its feet and we should lean on our local councillors and TDs to pressure the Government to turn its attention to aiding said businesses, instead of propping up those that sullied our economy and international reputation.

Caroline Byrne



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