Local Government Funding needs to be equitably balanced between central government, local property tax and commercial rates...
The Director of the Small Firms Association, Patricia Callan, has called on all local authorities to vote to decrease commercial rates on business. “Up to 12 Councils are reported to be implementing up to the maximum 15% reduction allowed in Local Property Tax (LPT) next year, as they have will have sufficient or excess funds. However, this exclusive focus on the LPT by local councils, bears no reflection on the significant cost pressures that small businesses are facing, with many still paying boom time commercial rates. Currently business contributes more than €1,600 million a year to the cost of local government through commercial rates and water charges. This is a substantial burden for small companies and must be paid regardless of employment headcount, turnover or profitability.”
Callan continued "Business funds about one-third of the cost of local government through the commercial rates system and other local measures such as development levies, water, and waste charges. We recognise the role played by local authorities in providing essential services, but the costs are too high, and there is scope for savings. Official figures show that between 2008 and 2013 the commercial rates contribution increased from 28% to 35%. Reductions are now long overdue to allow business to grow and compete, and to support growth in jobs."
“We need to see a fair and balanced approach to local government funding, which sees business pay its share for services it actually receives primarily on a user pays principle, with the domestic sector treated equivalently and Central Government making up the balance for broader services. The business community needs to believe that the local authorities are working on its behalf and therefore the SFA contends that a Business Users Forum should be established in each local authority area to improve consultation with and responsiveness to business”, commented Callan.
In conclusion, Callan stated: “Local authorities cannot be allowed to sort out their own financing issues by levying additional charges on the small business community, who have no hope of passing on this massive cost increase to their customers. We need real reform of local authority financing and better management to ensure that costs are reduced and potential efficiency gains realized. Any savings realized by the local authorities should be passed on to its funders, on a balanced basis, based on the overall share contributed by the small businesses and the domestic sector to their overall budget”.
Article Published: 29/07/2014