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Local Government Rates and Other Matters Bill 2018 – Minister Phelan's Second Stage Speech to the Seanad

Published on Tuesday, 09 Jul 2019
John Paul Phelan TD

Check against Delivery 

I move: “That the Bill be now read a second time”.

Introduction and Overview

I am very pleased to bring this important Bill before the Seanad today.  The purpose of the Bill is to modernise the commercial rates system.  Commercial rates make up approximately one-third of local government current income every year and are the single largest income source for local authorities, providing income of almost €1.5bn per annum, between 15% and 53% of total funding for local services at individual local authority level.  

It is critical that the Bill is enacted before the summer recess, to ensure enactment of critical rates related provisions to:

  • ensure local authorities do not lose out on any revaluation buoyancy;
  • ensure rates can be applied immediately after revaluation; and,
  • provide for alleviation and abatement schemes,

These amendments are required in good time for local authority 2020 budgets in the Autumn.

Separately, there are a number of other important amendments to planning and residential tenancies acts that need to be enacted before the summer.

The legislation governing the levying and collection of commercial rates is spread across numerous enactments, many of which date from the 19th century.  The primary legislation relating to rates is the Poor Relief (Ireland) Act 1838.  This legislation is long overdue.

The drafting of the Bill has been informed by extensive consultation with rating experts in the local government sector and the Valuation Office. We have also taken on board important feedback from local authority members and rate payer representatives. In general, ratepayer groups have welcomed the intent of the proposals. They recognise that further improvements to rates collection levels are necessary, both to ensure that local authorities are equipped to provide services to the local community and to ensure that ratepayers are not subsidising those who do not pay.

While this legislation is very important, in its own right, it is also an important building block in the context of overall improvements to the valuation and rating system underway and planned. These include a review of the Valuation Tribunal; Extra Resources for the Valuation Office Revaluation and Revisions Programme and a Review of Exempted Properties. These important initiatives are being prioritised for implementation in the Autumn. Further consultation with stakeholders will take place in that context.

A key intention of this legislation is to encourage ratepayers to engage with their local authority more and sooner in the process. This will mean that the annual rates collection process is more effective and efficient for both parties. It is important that the relationship between local authorities and ratepayers is positive given the critical role of commercial rates in local government and the vital role of local businesses in our villages, towns and cities.

Local authorities that better understand the local business environment and ratepayers businesses are better equipped to design alleviation and abatement schemes and to arrange suitable and equitable payment plans. Consultation with business and the public is critical.

In recognition of a challenging operating environment and to support businesses, in recent years, up to and including this year, the Department has requested local authorities to exercise restraint in setting the Annual Rate on Valuation. To their credit and notwithstanding the pressures on their own finances, local authorities have adhered to these requests.  The national average ARV has not changed significantly in recent years. 

Main Provisions of the Bill

I will now take you through the main provisions of the Bill.

Section 1 provides for the interpretation of terms used in the Bill.

Section 2 provides clarification in relation to the local authority’s role in the adoption of the annual rate on valuation.

Section 3 provides that a local authority shall consider the local authority’s budgetary needs in determining the applicable annual rate on valuation.

Section 4 provides the power for local authorities to levy rates on the occupiers of relevant property, as identified in schedule 3 of the Valuation Acts 2001-2015.  It confirms the longstanding provisions that the commercial rates liability is calculated by multiplying the valuation determined by the Commissioner of Valuation by the ARV adopted by the local authority at its budget meeting.

Importantly, this section also modernises the rates process in two ways. It provides for additions and amendments to the valuation list to become immediately effective for rating purposes.  It also provides for the pro-rata levying of rates where the ratepayer changes during the year.

Section 5 provides for the storing and publishing, by the local authority, of the contents of the rate book in electronic format.  This is a critical modernising requirement

Section 6 provides a power to limit the level of ARV that can be adopted by the local authority.

Section 7 provides that local authorities may offset any rates owing to them against an amount that the local authority owes to that ratepayer. 

Section 8 provides that the collection of rates, and interest due on unpaid rates pursuant to this Bill, are under the care and management of the local authority.

Section 9 provides that a local authority may provide a temporary abatement for vacant properties, subject to a maximum relief which may be specified by the Minister, to ensure that all property owners (other than those whose rates liability would be below a de minimis threshold) make some level of payment to the local authority and that vacant property is discouraged in towns, villages and cities.

It is proposed that any revenue accruing from reductions in the vacancy refund, would be added to the General Municipal Allocations of the Municipal Districts in the Local Authorities.

Section 10 provides local authorities with the power to establish a database of relevant property and with the power to delegate this function to the Local Government Management Agency as a type of shared service.

Section 11 provides an obligation on the owners and occupiers of relevant properties to provide relevant information to the local authorities.

Section 12 provides local authorities with the power to apply interest to unpaid rates.  The provisions are based on the provisions in the Taxes Consolidation Act, which provide for the addition of interest to unpaid taxes to the Revenue Commissioners. The provision is focussed on incentivising positive engagement with the local authority rather than increasing revenues. Therefore, the interest would only accrue from the 1 January of the following year where a ratepayer refuses to enter into an agreed payment plan with the local authority.

Section 13 provides for obligations on the owners of a relevant property, before the sale of that property, to pay any rates and interest payable. This provision only applies to rates liabilities accrued by the owner when the owner is also the occupier of the property.

Section 14 provides that any unpaid rates and any interest accruing is a charge on the property where the owner is the liable person.

Section 15 provides for local authorities to introduce rates alleviation schemes to support specific national and local authority policy objectives. This could include Realising Our Rural Potential: The Action Plan for Rural Development; local economic and community plans developed by local authorities; and planning objectives set out in Development Plans and Local Area Plans.

The approval of schemes would be a reserved function of the elected members. We are all agreed that consultation will have to be a feature of the development of these schemes.

Section 16 provides for the appointment of local authority staff as authorised officers by the Chief Executive for the purposes of the Act.

Section 17 provides those authorised officers with certain power to enter relevant property in certain circumstances.

Section 18 provides that the Minister may make regulations under the Bill.

Section 19 is a standard provision relating to expenses in the administration of the legislation.

Sections 20 and 22 are technical amendments to rates enactments on foot of this Bill.

Section 21 provides for amendments to the Valuation Acts 2001 to 2015.  The section includes technical amendments in respect of amendment of the effective dates for rates and the timeframes allowed to public utility undertakings and other ratepayers undergoing valuation by the Commissioner of Valuation.

Importantly, the section amends Section 56 of the Valuation Act in respect of the making of a Rate Limitation Order.  A Rate Limitation Order is set for local authorities following a revaluation, to ensure it is revenue-neutral by setting the upper limit for rates income in the following year. This amends the Rate Limitation Order formula to take account of rates loss in valuation of appeals. 

A further amendment to section 56 mitigates an unintended consequence of potential loss of income to a local authority undergoing a standard revaluation that coincides with the valuation of a new global utility. This amendment to the Rate Limitation Order formula will ensure that any buoyancy from new or revised global utility valuations can be accounted for in the formula.

Non-Rates Related Amendments

Section 23 provides for transitional arrangements in relation to the Office of the Planning Regulator and the Regional Spatial and Economic Strategy. It is required to ensure that the Minister has a robust legal basis to issue a Direction, if necessary, to ensure that the Regional Spatial and Economic Strategy is consistent with the National Planning Framework or other key Strategies. The proposed amendment will apply only in respect of the three current Regional Spatial and Economic Strategy’s that commenced prior to the establishment of the Office of the Planning Regulator.

Section 24 is a minor technical amendment to give the Cork Councils an extra year to review their development plans to facilitate the significant workload and range of complex issues arising from the revisions to local government arrangements in Cork and to take account of the Southern Regional Spatial and Economic Strategy.

Section 25 is a technical amendment to the Residential Tenancies (Amendment) Act 2019,  

The 2019 Act inserted a description into section 19 of the works that would bring about a substantial change in the nature of the accommodation that would warrant an exemption from the 4% rent increase restriction applicable in rent pressure zones. 

Concerns were raised that it would not be possible for works undertaken to protected structures to satisfy this description and that this could result in the loss of such units from the rental sector.  In recognition of this and to encourage continued investment in this type of rental property the first rent set under the tenancy of a protected or proposed protected structure dwelling not rented in the previous 12 months can be the market rent.  Thereafter, the 4% annual rent increase ceiling will apply. 

Section 26 amends the Residential Tenancies (Amendment) Act 2019 relating to the application of the legislation to student-specific accommodation whether occupied under licence or a tenancy, and the arrangements for the commencement of annual registration for tenancies generally and for the student-specific accommodation sector. This is important to close off a potential loophole before the summer rush on student accommodation to ensure tenancies are protected. 

Section 27 provides for the repeal and revocations of various provisions of rating law to be replaced by the new provisions.

Section 28 is a standard provision in respect of the title of the Bill and for the commencement of the various provisions contained in the Bill.


As well as simplifying the processes for levying and collecting rates, this Bill addresses some issues which will have a positive financial impact on local authorities. In particular, the amendments to the Rate Limitation order, ensuring that a revaluation exercise is revenue neutral rather than loss making for the local authority and that revisions and additions to the valuation list are immediately rateable. 

In addition, the provisions I have described in Sections 9 and 15 relating to Rates Abatement and Alleviation Schemes, further empower elected members and their local authorities to devise and achieve policy objectives through locally targeted schemes.

The Rates Alleviation schemes, will allow local authorities to make schemes to support local and national policy objectives and challenges particular to their local areas. It will allow local authorities to support specific objectives to promote community, social and economic development, urban planning or rural regeneration. 

Again I envisage that the regulations will provide that such schemes can be made for specific local electoral areas or municipal districts.

As part of this process and indeed as part of the local authority budget process generally, I believe that public consultation and engagement should play a central role.  A specific model of consultation has been provided for in relation to Local Property Tax and I am open to expansion of that model to encompass the wider local authority budget process. 

Specifically, in relation to rates I believe there should be an ongoing engagement between local authorities, rate payers and the community, facilitating discussion around issues such as urban planning, rural regeneration, the public realm. It also provides an opportunity for local authorities to outline the projects and services funded by rates income.   

During Report stage in the Dáil I accepted an amendment from Deputies in Fianna Fail to provide for public consultation in the rates abatement scheme process and I committed to inserting an amendment along the same lines for rates alleviation schemes in the next appropriate piece of legislation to be brought forward from the Department.

Furthermore, section 14(5) of the Bill includes quite a broad regulation-making power for purposes relevant to the Bill; the Minister and I will consider whether that provision can be relied upon to ensure a public consultation such as that envisaged by this amendment can be held. 

In relation to the matter raised by local authority members concerning the rating treatment of their Offices, I have made a commitment to Members Groups and now make a clear commitment to the House, to address this issue as a matter of urgency. 

I recognise that it is a matter of concern to Members that an office they establish and from which they serve their communities as elected representatives could be liable for commercial rates. I therefore commit to resolving this issue – separate to the current Bill process so that an early resolution is found which is satisfactory for all concerned. In this regard, I will meet a delegation of Members on 16 July.

This Bill is the first significant piece of rates legislation to be proposed in many years and given the importance of rates income to the funding of local government it is important to modernise the fundamentals of rates.

In summary the Bill will;

  • modernise key aspects of the legislative code to make rates and the legislative basis of rates more transparent for ratepayers;
  • streamline the process of the making of the rate within local authorities to improve efficiency and remove some of the archaic processes which do not fit with modern administrative practices;
  • improve local government’s suite of collection tools to enable local authorities to build on recent improvements in rates compliance thus ensuring the levying of rates is fairer for all ratepayers and that those who pay on time are not subsidising those who delay or seek to avoid payment;
  • and, protect a vital source of revenue for local authorities to ensure their capacity to continue to deliver vital local services for our citizens and businesses alike.

Finally, I’d like to thank the staff of local authorities for their input into the work supporting the development of the Bill. I also want to thank my own staff and colleagues in the Office of the Attorney General for all their hard work. I believe that this Bill will significantly improve the commercial rates regime for all concerned.

I look forward to engaging with you as the Bill progresses through the Seanad.

I commend the Bill to the House.

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