How the proposed changes to rates would work
THE Head of Finance at Wexford County Council Annette O’Neill outlined proposals for changes to the amount of rates payable by local businesses in 2018.
Commercial Rates are a statutory charge, the income from which is used to part-fund the annual revenue (day-to-day) expenditure of the local authority). It is a balancing figure, derived at Budget time by taking the Council’s total estimated expenditure and deducting total estimated income (including property tax income).
The resulting figure (approximately €34m per Wexford County Council’s 2017 Budget) is then divided by the total rateable valuation (every commercial property’s individual rateable valuation all added together – approx €474,400) to give what’s known as the Annual Rate on Valuation – ARV (currently 71.52).
Each commercial property owner is then charged a rates bill for the year, by taking the property’s rateable valuation and multiplying that by the relevant ARV multiplier (currently €71.52 for most of Co Wexford ratepayers). If your property has a rateable valuation of 100, then your rates bill for 2017 is €7,152.00
A property’s rateable valuation is determined by the National Valuation Office, completely independently of the county council. Rates harmonisation was introduced nationally in 2015 and Wexford County Council commenced a movement of the ARV in the former Wexford, Enniscorthy and New Ross rating authorities towards the general ARV for the county, €71.52, which is already paid by businesses in rural south west Wexford. The legislation provided for a maximum period of ten years for harmonisation and for a decision of the council on the level of the move in the harmonisation process annually as part of their budget process. Wexford Co Council have agreed a move of 2.9 per cent in both 2016 and 2017.
In 2016, the first year of the harmonisation movement, the council adjusted the Rates Incentive Scheme (introduced in 2013) to assist ratepayers, and specifically SMEs with the movements towards harmonisation.
Ms O’Neill said there has been no rates increase since 2008.
‘2018 will represent a decade of no increases, with the exception of rates harmonisation. 2.9 per cent is not sustainable if the development plan for the county is to be delivered. Since the harmonisation of Wexford Borough in 2017 the rates harmonisation at 2.9 per cent will only generate €88,000 in 2018. In 2019 this will drop further, to €48,000. From 2019 to 2024 rates will generate approx €35,000 a year.’
Ms O’Neill said that at the upcoming budget discussion for 2018 councillors will consider and decide on a proposal to apply full harmonisation in the remaining former town rating areas, New Ross and Enniscorthy.
The proposal to be considered by members of Wexford County Council will include a special rates incentive scheme for these rating areas.
Ms O’Neill said the proposal will see the Rates Incentive Scheme increased from 6 per to 15 per cent for the 320 ratepyers in the former New Ross Town rating area.
‘82 per cent of the 320 ratepayers in the former New Ross Town rating area currently pay €5,000 or less in rates.
‘For ratepayers with this level of Commercial Rates the full harmonisation will add €1,088 to their rates bill but the Special Rates Incentive Scheme will see the grant available under this scheme increase from €300 to €913, resulting in an overall net increase of €475 or €9.13 per week.’
The harmonisation process will require a minimum movement of 2.9 per cent or €145 in this particular example.
The proposal for full harmonisation, a movement of 21.76 per cent, with the addition of the Special Rates Incentive Scheme means that the cost of the additional move to full harmonisation is €330 in this example of €6.34 per week.
She said: ‘ The need to harmonise is informed by a number of issues including the council’s financial position which is under severe pressure. There has been no increase in Rates since 2008 and central funding for the local authority remains at 2013 levels. The Local Property Tax doesn’t provide a sustainable income for the purpose of securing borrowing for delivering the development plans outlined for the meeting.’
County Wexford currently relies on the national equalisation fund to achieve 2013 levels of funding and there would need to be at least an additional 9,000 more properties in the county paying LPT before there would be any buoyancy, she added.
‘ The county needs significant investment and needs to be in a position to attract increase commercial and tourism activity and this will bring benefits to all business owners in the county.’
Ms O’Neill said the council has taken a proactive position to develop commercial properties and solution to promote the attractiveness of the county and the time is right to move on this proposal and this is why the council has developed and is moving to deliver the Economic Development Programme for the county.
‘ The county’s rate payers and businesspeople need this level of investment in the county to assist in growing and developing their business and allowing the county to compete with other counties and countries for attracting commercial activity.’
Ms O’Neill said Wexford County Council proposes to borrow significantly to deliver the development programme proposed and with low interst rates currently available, she said the timing for this is right once the council can prove that it has a sustainable source of income to repay this borrowing.
She said the base rate of 71.52 cannot be increased until harmonisation of rates is finalised, adding that every 1 per cent movement in Commercial Rates would impact on Council income at a level of €338,000 a year.
On November 27, councillors will consider the budget for Wexford County Council for 2018 and this will include consideration of the harmonisation proposal together with a proposal to increase rates in the entire county by 3 per cent, which would generate over €1m for the local authority.
She said this would lead to a further increase over the harmonisation in the rates bill for the New Ross town businesses but with the special Rates Incentive Scheme this additional increase will also attract the 15 per cent SRIS.
‘Most businesses in the New Ross town area will therefore see an annual increase in the region of €300 per year following the proposed harmonisation and rates increase.’
The matter will be fully discussed with member of the council at the end of November.