OVER-RATED!

21 April 2011 No Comments by The Northern Standard

“An outdated and punitive method of raising revenue.”
The words used by Monaghan Town Council Cathaoirleach Robbie Gallagher this week to argue strongly for a radical reform in the method of local government funding that would see the current reliance by Councils on commercial rates reduced or removed entirely will strike a deeply sympathetic chord with the many businesspeople in our county for whom the conduct of commerce has become less a pursuit of profit than a dogged daily battle for survival.
Colr Gallagher’s notice of motion passed at Monday night’s Council meeting, calling on Minister for the Environment Phil Hogan to address the increasingly unviable system of founding local authority finances on levies on business activity, crystallises a conviction that has been gaining force in Council chambers across the county, and the country, in recent times.
Local authorities in our county have in the vast majority of cases adopted the practice in recent times of deciding not to increase the rate on valuation when they adopt at year’s end their Annual Budgets for the coming 12 months. This is less evidence of the lobbying power of local Chambers of Commerce and business groups – although such lobbying has been conducted with some consistency and force – than it is a realistic recognition of prevailing economic circumstances.
And it has become increasingly evident that even the decision not to increase the rates burden further on the county’s business sector is a concession inadequate to protect individual enterprises from falling victim to recessionary eclipse.
The March meeting of Monaghan Town Council heard that over €1 million in levied rates went uncollected in 2010, and that around half of that sum had effectively been written off because the businesses under that portion of the rates warrant were closed for either all or part of the year.
Colr Gallagher’s assertion that rates have grown outdated as a revenue-gathering mechanism for Town and Co Councils gathers strength in light of such statistics. And they have undoubtedly grown punitive in the current economic climate when the commercial prosperity that forms an integral presupposition for the justification of a rates system no longer exists.
The theory behind rates is sound enough, and can be read as a communal obligation on profit-making enterprises to contribute to the governance of their community and reciprocate the local authority for the services they enjoy. All citizens once shared this obligation through household rates, and may be compelled to do so again if proposals for the introduction of domestic water metering become manifest.
The decline in the national and world economy, however, has accentuated the imbalances and imperfections of a system that the commercial community has long regarded as inherently unfair. Rates have now become a propellant of the vicious circle that is spinning into a vortex of oblivion around the heads of many small, often family-run shops, manufacturers and service providers.
They are an unavoidable cost factor that in a good many cases is crippling the capacity of ratepayers to generate the level of revenue necessary to enable them to discharge their obligations to the local authority. Many business costs have declined in recognition of the current economic situation, but rates are resistant to such forces.
While local authorities themselves have the power to raise or lower rates, they are not responsible for the valuations that are imposed, and therefore their influence on this cost factor is limited. And most Councils have also arrived at the point in their own finances where sizeable rates reductions of the type that businesses feel would give them a breathing space are simply not achievable without drastic reductions in local authority employment or service provision.
Rates do appear to stand guilty as Cathaoirleach Gallagher charges – no longer relevant to the times, and a punishing imposition on many of those who have to pay them. But what is the future for local government funding without them?
It was a disappointing feature of Monaghan Town Council’s debate on their Cathaoirleach’s motion that no alternatives were advanced to this form of revenue generation. The councillors might well cite in their defence the argument that this is ultimately an issue for central government to address. Fine Gael’s David Maxwell did make such a point, and also held out some hope of reform in this area when he referred to new Minister for the Environment Phil Hogan’s previously stated commitment to address the rates question.
We await the Minister’s response to the Monaghan motion, and his future moves in the direction of local government reform, with considerable interest. We suspect, however, that the solution the new Government will choose to pursue might not be to the tastes, or in the interests, of those who labour in the field of local administration.
Such is the current mania for whittling the public sector down to a more streamlined and smoothly functioning entity that the danger is that what will remain after the work of the Government’s scalpel is done will be a skeletal structure divested of many of its most important and defining features.
One sure way of making local authorities less dependent on rates is by making them less capacious in powers and functions. In this regard Town Councils would seem to be particularly imperilled.
There were plenty of signals in the closing stages of the previous Government’s tenure that suggested that municipal authorities could soon be absorbed by, or become mere adjuncts of, county or even regional structures of administration. It remains to be seen whether their successors in office follow the former Government’s trend, but the prevailing climate of stringency would appear to leave Town Councils particularly vulnerable to diminution.
Certainly a meaningful and open debate on local government reform is overdue. It is incumbent on the new Minister to institute such a dialogue with local authority executives and elected representatives.
Rates and the alternatives to them deserve to be high on that agenda. Colr Gallagher’s motion may not have put forward a solution to the rates dilemma, but if it focuses the attention of the Minister on the need for it to be addressed, it will have rendered a valuable service, not just to Monaghan’s ‘over-rated’ business sector, but to those who administrate and participate in the functioning of local government.

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