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Rates hike of 3.5% for bigger firms is agreed

December 6th, 2022 12:30 PM

By Kieran O'Mahony

Tim Lucey: hike in rates is ‘vital’ to maintain services.

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A WEST Cork councillor has warned that increasing commercial rates is sending out the wrong message to tech and pharma companies and could deter big businesses from setting up in the county.

Cllr John O’Sullivan (FG) was reacting to the rates hike approved at a tense and lengthy budget meeting of Cork County Council. Councillors voted to increase the annual rate of valuation (ARV) for commercial rates by 3.5% but were told that it won’t affect up to 85% of ratepayers in the county.

Council officials sought to put the threshold for a rate incentive grant scheme for 2023 at €2,000, an amendment sought by Cllr Alan Coleman (Ind) and passed by councillors ensured this was increased to €7,000. 

This effectively means that those paying under this amount in rates will not be subject to the rate hike. However, for those paying over €10,000 in rates, the first €7,000 will remain at the same rate, but the €3,000 balance will be subject to the rate hike of 3.5%.

Speaking to The Southern Star, Cllr O’Sullivan, who voted against the increase, said his worry is that this sends a dangerous signal to some of the big tech and pharma companies already paying ‘colossal’ sums. ‘We’re very dependent on foreign direct investment and if we, as a principle, target them, will that influence their decision making in deciding to locate in Cork county?’ asked Cllr O’Sullivan.

He also warned against creating a two-tier rate system, something which Council chief Tim Lucey agreed would not be a good strategy.

Cllr O’Sullivan said some of the big ratepayers have appealed their rates and are set to get refunds – showing that they are concerned with inflation and rising energy costs.

However, Mr Lucey said the price hike was vital to ensure the Council could deliver and maintain service levels for the coming year and pointed out the rate was below inflation.

‘Considering the Council’s rate base profile (80% have bills less than €5,000), a rate increase will not have a material impact on the bulk of ratepayers. We believe the modest 3.5% will enable us to increase our budgetary spend and return that investment to communities and businesses,’ said Mr Lucey.

Cork is one of the few local authorities which has not adjusted its ARV in the previous 14 years. Cllr Coleman said that the threshold move would protect sole traders and small businesses on high streets in towns and villages and inslulate them from more price hikes. Fine Gael members voted against the rates hike, with Cllr Jack White, who runs his own small business, saying a rate increase is ‘the wrong optic’.

‘There is a cash flow crisis about to hit businesses in January and February when the dust settles after Christmas, and it won’t be pretty,’ said Cllr White, while Cllr John Paul O’Shea said rising the annual rate by 3.5% is ‘not the most prudent’ at this time.

Councillors voted by 33 to 19 to pass the  budget of €403.2m for 2023, up from €373.5m in 2022. Council officials said the increase may help recruit more outdoor staff.

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