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How much do our Local Authorities rely upon retail rates?

Businesses across Ireland contribute approximately €1.5 billion in commercial rates to Local Authorities across the country each year. This is a critical source of income for each of the 31 Local Authorities in the State and typically accounts for between 16% and 53% of their revenue stream with the national average standing at 33%. According to the latest available statistics collection rates averaged 86% nationwide in 2017, significantly less that the corresponding LPT collection rate which stood at 97%.

Within the Dublin City Council administrative area commercial rates income of €353.5m has been budgeted for the 2020 financial year. Of the 21,000 commercial properties within the city it is estimated that some 34% are classified as retail properties following the last Revaluation process. Therefore, the total annual rates income from retail properties alone in Dublin City is in the order of €120m, representing almost 12% of the Council’s total annual revenue for 2020.

The reliance on rates income from retail properties is even more pronounced in Dun Laoghaire-Rathdown which is home to the country’s largest retail scheme. Dundrum Town Centre alone contributes €9.2m in annual rates income representing just over 10% of the Council’s budgeted rates income for 2020.

In the midst of the current Coronavirus pandemic most businesses, particularly those considered non-essential and which have been forced to shut their doors, are intensively considering cash-flow and how to eventually get their businesses re-open for trade, if at all. It’s likely that overheads such as wages, rent and payments to Revenue will take precedence over commercial rates.

For its part the Government has recognized that ratepayers, particularly small and medium retailers, hospitality, leisure and childcare operators are likely to be the businesses that are most adversely affected. However, they have stopped short of issuing an exemption from commercial rates unlike the U.K Government which announced that all retail and hospitality firms will be exempt from business rates for 12 months. In the absence of such tangible Government intervention on the issue Local Authorities will be facing major funding difficulties and hard choices over which of their services to cut as additional revenue raising measures will not be palatable.

Niall Brereton