King James hardly knew what he was starting...
WITH SOME BUSINESS OWNERS FACING HUGE HIKES IN RATES BILLS THIS YEAR, DAVID MEDCALF TAKES A LOOK AT HOW THE CHARGES CAME INTO BEING, HOW THEY ARE CALCULATED, AND THEIR EFFECTS
IT ALL GOES BACK to James the First of England – otherwise referred to as James the Sixth of Scotland. It was in or around 1608 that he instituted a system of local government which allowed towns to collect their own taxes. In return for a cut of the takings, the King set councils free to run their own affairs.
These days, councillors no longer hold their seats for life, as they did in the seventeenth century, and they are not expected to provide services such as prisons. The flow of money now runs from central to the local, rather than the other way around, with councils depending in part on the Local Government Fund handed down from Dublin by the Department of the Environment.
Modern County Councils and Town Councils have websites and Directors of Services. They may no longer run the jails but they are held responsible for everything from potholes to planning, art to enterprise. They are complex, sophisticated organisations with large staffs – Wexford County Council alone has more than 860 personnel on payroll.
No matter how up-to-date, however, it is a system that still carries some of the baggage accumulated over the centuries since King James held sway. And one of the most tangled elements in the legacy is commercial rates. They remain the principal crutch on which councils rely for finance.
Cllr. Padge Reck still uses phrases such as 'pence in the pound' when he talks about the time honoured system, an unconscious acknowledgement that rates have been around long before he wore short pants. The Elder Lemon of local politics in Wexford ('but I still have my own hair'), he continues stubbornly to use the terminology he grew up with, even though it is now a case of cents in the euro.
Either way, pounds, punts or euro, any rate-payer must know that the bill has two components. One is the local element set by elected councillors. The second is the R.V., or rateable value, these days set by independent officials whose headquarters is in Dublin. Multiply one by other to arrive at the amount due. Many businesses do not like what they see when they do the maths.
'There are discrepancies, serious discrepancies,' says Cllr. Reck, who is concerned that the system is becoming a dampener on enterprise. It makes no sense to the man from Mulgannon that shopkeeper who invests €20,000 to prevent premises falling down may be hit by an increased R.V.
It is the visit that every business owner must hate: the call by the inspector from the valuation office, complete with measuring tape and notebook. The examining official must take account of floor space but it is not size alone that matters. A square metre of retail in Grafton Street is clearly worth a great deal more than a square metre of North Street in New Ross or McDermott Street in Gorey and this is factored into the calculations. Still, an inspection can only mean one dread thing – a rise in the amount demanded.
One shop owner in Enniscorthy has been put to the end of his tether by the prospect of a 105 per cent increase in the amount that will be demanded for 2011. John Walsh of Mahady-Breen may appeal the verdict but challenging the valuation inspector is a chancy and potentially costly option. Rateable values are no secret. They are displayed on the internet by the Valuation Office (www.valoff.ie) for all to see but, though they may be open, they are anything but simple to understand. Take two filling stations in Clonroche as an example. John Sheehan at the Enniscorthy end of the village has an R.V. of €19.05, which means that he is expected to stump up at least €1,200. A few hundred metres along the road, at the New Ross end, is the premises of John and Rita Kavanagh which merits an R.V. of €125 and a bill each year for more than €8,000.
Sheahan's is smaller and no longer sells petrol and diesel to passing motorists. Besides being bigger, Kavanagh's has been extensively modernised and has a deli counter. So perhaps there is no major injustice being foisted on anyone in this instance.
One the other hand, Cllr Reck is concerned that the policy of jacking up rates demands where private investment has been made is not always fair. He points to the troubled White's Hotel as an example. Its current R.V. of €4,280 means it has the highest annual rates demand in the Wexford Borough Council area. Multiply the €4,280 by 67 and the amount sought exceeds €286,000 every year, even before water charges (another six figure sum) and refuse charges.
'It is too high. They have a genuine grievance,' asserts the veteran councillor. 'That is a phenomenal rate.'
Any entrepreneur with rates unpaid who looks to the local authority to be merciful or understanding will surely have another think coming. The public representatives have done their bit by pegging the 2010 rates at 2009 levels and they will be under pressure from recession hit industry and commerce to repeat the trick in 2011. However, paid officials have legal and practical reasons for ensuring that every last cent is squeezed from those who owe them the money.
Income from planning levies is down. Income from motor tax is stuttering. The Government hand-out from the Local Government Fund is dwindling. On the other side of the accounts, the cost of repairing frost damaged roads has handed county manager Eddie Breen a major headache. There is no room for mercy as the size of the council's over-draft continues to edge closer and closer to crisis point.
'Rates are an issue with every business experiencing trading difficulties,' says Clonroche-based councillor Denis Kennedy who warns that defaulters will not get away with dodging payment. Like the Mounties, the local authorities always get their men (and their money) in the end.