County Tipperary Chamber voices concern over impact of 5% commercial rates hike on local businesses

The organisation representing Tipperary businesses has voiced concern over the impact the 5% hike in rates approved at Tipperary County Council’s 2023 budget meeting will have on the viability of many local firms already struggling in the energy and inflation crisis.

County Tipperary Chamber issued a statement highlighting its disappointment with the rates increase in the wake of the council’s approval of its biggest-ever budget, worth more than €205.6 million.

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An overwhelming majority of 33 councillors voted to approve the budget at the end of a marathon meeting lasting more than five hours at the local authority’s Clonmel Civic Offices last Friday afternoon.

The budget was voted on and adopted after council management agreed to a joint Fianna Fáil and Fine Gael proposal to reduce the 7% rates hike proposed in the draft budget to a 5% increase along with changes to the commercial rates early payment to allow more businesses to qualify for the discounts the scheme offers on rates bills.

The 5% rates increase will bring the council’s Annual Rate on Valuation (ARV) to 0.2015 next year.

Three Fine Gael councillors, Michael Murphy and John Fitzgerald from Clonmel, and Mary Hanna Hourigan from Cappawhite, broke ranks with their party to join with Mayor of Clonmel Cllr Pat English of the left wing Workers & Unemployment Action Group in voting against the budget.

Meanwhile, a budget amendment tabled by Cllr English calling for €198,000 set aside in the 2023 budget for councillors to attend conferences in Ireland and abroad to be allocated instead to playgrounds in each Municipal District was rejected by 29 votes to 5.

Following the budget meeting, Tipperary Chamber CEO Michelle Aylward said while rate rebate schemes will help businesses, this rates increase will be a “burden on many already challenged businesses”.

She said Tipperary County Council needs to continue to invest significantly in the economic development of Tipperary and marketing activities which would drive additional business to offset some of the impact.

“The real issue here is the inadequate level of central Government funding for local authorities,” she said.

“Currently businesses are picking up the tab for a legacy of underfunding of county councils by central Government, but this cannot continue.”

Council management and the Fianna Fáil and Fine Gael councillors who proposed the budget’s adoption, however, argued the rates hike is necessary to enable the local authority to draw down millions of euro of Rural Regeneration Development Fund (RRDF) and Urban Regeneration Development Fund (URDF) grants approved for the county in order to rollout infrastructure projects to rejuvenate the towns centres.

The council must contribute a percentage of matching funding for each of these projects and this will be raised through loans, which will need to be paid through an increase in rates.

Council CEO Joe MacGrath outlined in his opening address to the budget meeting that almost €70m in grants has been secured to date with match funding of €18.7m from the council required.

Projects recently completed or near completion included the new civic plaza at Clonmel’s Kickham Barracks, the Clonmel Regional Sports Hub, Tipperary Town Market Square and Fethard Town Park.

In the latest RRDF allocation announced a few weeks ago, Carrick-on-Suir, Cahir and Roscrea secured €30.8m RRDF funding town centre regeneration projects with the council having to contribute close to €8m matching funding for them.

He said the council was very aware of the difficulties being experienced by businesses. In view of this, the council proposed extending its Early Payment Scheme for rates to cushion the impact of the hike on smaller rate payers.

It would do so by increasing the upper limit at which a ratepayer can qualify for the scheme from €12,000 to €12,500 and increasing the percent reduction applied from 5% to 6% with the maximum reduction increasing from €500 to €600.

The scheme would also remain open to customers with arrears in their accounts subject to compliance with certain requirements.

Mr MacGrath pointed out that Tipperary had the third lowest ARV in the country and it had remained largely unchanged for over 10 years. Larger companies and industries in neighbouring counties like Waterford, Limerick and Kilkenny were paying far higher rates bills.

He also noted that 64% of commercial properties in the county secured a rates reduction under the 2019 National Revaluation Programme.

At the end of over four hours of debate on the draft budget’s provision, the meeting adjourned briefly for the political party groups to consult and negotiate.

At the resumption of the meeting, Cllr Siobhán Ambrose of Fianna Fáil proposed the budget be adopted with the amendment that the commercial rates increase be reduced from 7% to 5% and that the upper limit band for businesses to qualify for the Early Payment Scheme that enables them to secure a discount on their bills be increased from €12,500 to €26,000.

She said members of the public kept asking councillors when were regeneration scheme projects in their areas going to happen but the caveat was the council needed to come up with matching funding.

“We have to make the difficult decision to raise commercial rates to meet these shortfalls.

“Every councillor is aware of the current challenges and difficulties for businesses and every possible alternative source (of revenue) has been investigated with the (council’s) Finance Section but unfortunately to finance a 25-year loan an increase in commercial rates is required,” she argued.

Cllr Ambrose asked the council to arrange drop-in clinics in every Municipal District where ratepayers can meet council staff about their rates bills and get information on the Early Payment Scheme.

The proposal was seconded by Cllr Marie Murphy of Fine Gael, who said it was never easy to increase commercial rates, particularly this year due to the cost of living crisis.

But she wanted towns and villages to benefit from the funding streams currently available from the Government and she didn’t see them continuing much longer.

She urged the county’s Oireachtas members to lobby the Government to allocate 100% funding for future regeneration projects so the council won’t have to increase rates again.

The council’s Head of Finance, Liam McCarthy, confirmed the council would still be able to balance its budget if the rates increase was reduced to 5%.

Cllr English, meanwhile, proposed the budget be rejected. He described it as another “austerity” budget and blamed years of underfunding of the council by central Government.

He said he was very disappointed at the decision to continue to levy the Local Property Tax at 10% above its base rate in 2023 and 2024 and feared the 5% hike in commercial rates will put huge pressure on the county’s business community.

Fellow Clonmel Cllr Michael Murphy said it was with a “heavy heart” that he seconded Cllr English’s proposal to reject the budget.

He said he couldn’t support the 5% increase in rates because while the Early Payment Scheme offered good incentives to businesses to reduce their rates bills, many firms didn’t have the cash flow to avail of it.

They were carrying unsustainable levels of debt from the pandemic and were now in a cost of living crisis.

He pointed out that under the national review of rates, 30% or 2,180 businesses in the county experienced an increase in their commercial rates and for some that increase was substantial.

“For those reasons I can’t support today’s budget,” he said. Sinn Féin councillors David Dunne and Tony Black, voted to approve the budget with Cllr Dunne declaring it was an “historic day” as this was the first time they were supporting the council’s budget since their election.

Cllr Dunne, who is Carrick-on-Suir Municipal District’s Cathaoirleach, said you couldn’t welcome the funding that was after coming for the county, including his hometown, and not vote for this (rate) increase.