Retail Ireland, the Ibec group that represents the retail sector, has published a new paper which highlights the 'serious deficiencies' in the current system governing how local authority rates are levied and collected from retailers.
The Irish retail sector is calling for a break in the link between rents and rates, which has led to many retailers paying disproportionate costs due to the prevalence of upward only rent reviews.
Retail Ireland says that the current system results in over €200 million in uncollected rates each year, and wants the government to bring in reform on this issue before the end of the year.
Inadequate System
"Local authority rates make up a significant portion of total input costs for Irish retailers," said Thomas Burke, director of Retail Ireland.
"Irish retailers are willing to pay their share in order to help improve local services, however the current system is wasteful and places an undue cost burden on retailers."
"Retailers have seen a significant increase in rates in recent years with very little return in terms of new service provision. This is of particular concern as retailers feel the pressure of rising costs across a range of other inputs such as labour, rent and utilities. This is leading to a general erosion of the sectors' competitiveness."
Proposed Changes
Retail Ireland has made a number of recommendations about how this system could be improved. It is calling on the Irish government to introduce a centralised collection process for commercial rates, so that retailers who operate on a nationwide basis will not have to deal with different local authorities.
It also wants the methodologies used to calculate commercial rates to be reformed, to increase transparency and encourage investment in local areas.
The group says that efforts should be taken at a local government level to give certainty to retailers, and increased revenue from local property tax should be used to revitalise city and town centres, inviting consumers to visit and shop in these areas.
Economic Role
Retail Ireland says that the current system deters investment and places the burden of funding local government solely on the shoulders of bricks-and-mortar retailers, putting them at as disadvantage to online retailers.
"The Irish retail sector is a driving force in the Irish economy employing over 280,000 people in every town and village across the country," added Burke.
"The sector is also the biggest contributor to the Irish exchequer, generating 23% of total tax receipts in Ireland. Urgent action is needed to address the threat to the sector's competitiveness posed by the current dysfunctional local authority rates system if we are to maintain retail’s key economic and social role in Irish society."
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
