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The Rates Waiver Scheme, which has saved affected businesses from paying their commercial rates to the council since 27 March 2020, has been extended until the middle of the year, says a report to the council’s Finance Strategic Policy Committee.
It had been due to run out at the end of this month.
In 2020, 92 percent of businesses in the city automatically qualified for the waiver, the report says.
Under the current 2021 scheme, which is different from the one last year, 44 percent of the rate-paying businesses qualify while 56 percent do not, it says.
In normal times, commercial rates make up a third of the council’s total budget, which was €1.079 billion in 2020, according to the Budget 2021.
Seventy-five percent of businesses usually pay less than €10,000 annually in rates to the council, while 40 percent pay less than €3,000 annually. Two-thirds of rates are paid by 5 percent of businesses in Dublin.
Under the last waiver scheme, a 100 percent waiver applied to the vast majority of businesses, with a small number of categories excepted.
If in an excluded category, a business had to be able to demonstrate a decline of at least 25 percent in turnover for the 6 month period of March to September.
Dublin City Council brought in €202.4m in rates from 2,146 businesses which were not covered by the waiver scheme, according to the Draft Budget 2021.
The 18,254 businesses that met the scheme’s requirements created a deficit in the council’s budget of €154.6m, which was covered by central government.
The 2021 scheme no longer waives offices and industrial premises with a rating liability of €100,000 or under, and vacant units.
A number of categories, including large supermarkets, department stores selling mostly groceries, banks and pharmaceutical manufacturing, have been excluded from the scheme.
There is now an appeals process, with 7.5 percent of all funding for the 2021 scheme allocated for the purpose of appeals.
“I would say that this is going to change,” said Daryl Barron, a Fianna Fáil councillor. “We could see a change in scenario in April or May.”
Barron said that while it may be possible that some businesses would struggle to pay under the rates scheme, the appeals process may cover them.
“Obviously, I would love to be in a situation where we could say, no small business would have to pay that. But I see we have appeals for anyone that doesn’t get the rate exemption, for anyone that has a reduced turnover or who might be slightly marginalised because of Covid-19,” he said.
Séamas McGrattan, a Sinn Féin councillor, said the central government has not said whether it will cover the shortfall that the council may experience from those who cannot pay rates.
“If there is a significant shortfall, that’s money we need to spend for services in the city,” he said. “We can’t put a figure on it now, because we don’t know how many plan to hopefully open.”
“If we don’t get it, it’s the council’s loss,” McGrattan said. “If we don’t get that money, it has a huge effect on our budget.”
McGrattan says he sympathises with businesses who may not have been able to open since March 2020.
The report details a list of businesses that qualify for the current waiver scheme, including hospitality, non-essential retail, airports, service stations, and childcare facilities.
“There’s a lot of businesses that aren’t open. It’s a low percentage of your income, but if there’s no income coming in, that’s when it becomes a problem. It’s that bit of relief,” said McGrattan.
Under the current waiver scheme, vacant units are no longer permitted to have their rates waived – without exception. They will not be granted permission to appeal, the report says.
McGrattan says he believes this is unfair to the owners of vacant units who may not be able to gather funds.
“They could be struggling to find a new business to go in, or it’s a company trying to get itself back off the ground. If they weren’t open in the first quarter of this year, how are they going to pay that bill?” he asks.
It may end up costing the council more to chase the funds that are unpaid by the owners of vacant properties who cannot gather the funds, says McGrattan.
Normally, not a lot of time is spent chasing rates, said McGrattan. The collection rate for Dublin City Council was 91 percent in 2017, higher than the national average of 88 percent.
A continuation of waiver exemptions for vacant properties could encourage those sites to stay vacant, says Dermot Lacey, a Labour councillor.
“You have to strike a balance between not encouraging people to leave properties derelict, because they don’t have to pay anything, and getting certain areas up and running again,” said Lacey.
He suggests that each council deal with rate decisions for vacant properties on an individual basis, allowing those who are improving their properties to be waived on the scheme.
“It would encourage people to use properties long term, it’s about bringing in income over time,” he said.
“You forgo some rates where you’re waiting for property to be developed, but you don’t reward them for leaving the place derelict,” said Lacey.
Future of Rates
Barron, the Fianna Fáil councillor, said the government should stay flexible on the Rates Waiver Scheme and “take this month by month”, and “if we need to change course again, we can”.
“We’re going to definitely hear a lot more from the minister if there is going to be any shifting in course of action for potential businesses that are still struggling, you know?” Barron said.
At the moment, the scheme lasts until the end of June with what happens next, like much at the moment, uncertain.
Lacey, the Labour councillor, said he sees this as an opportunity for the entire practice of collecting rates to be revised.
Rates cannot be relied on for the future long-term funding structure of local government, he said, because the commercial uses of properties in Dublin has changed.
“Even when Covid is resolved, I think the habit of working from home will be well established, so there’s going to be a fundamental change,” Lacey said.
Said McGrattan, the Sinn Féin councillor: “There’s a degree of certainty up until the end of June, but businesses are going to have a lot of problems post-June, and it’s not clear how that is going to operate.”