Rates System

Background

Domestic rates were discontinued under the Local Government Financial Provisions Act 1978.  The Supreme Court in 1984 held that the system of valuation of agricultural rates was unconstitutional.  It was based on too arbitrary a valuation in reference to the historical Griffith Valuation only.  Local authorities are being paid a grant in lieu of agricultural rates.

The Valuation Act, 1988 was a precursor of the 2001 Act.  It provided for a revised system of valuation and appeal to the Valuation Tribunal.  Following an interdepartmental review, the Valuation Act 2001 provided for the updating of the valuation system, the valuation of all rateable property every five to 10 years and removal of deficiency.

In 1999 a working group on the reform of rates was established.  Its main recommendation included re-enactment and modernisation of legislation;

• standardisation of rating law and practice across all authorities; liability to remain with the occupier;
• statutory right to pay by instalments;
• interest to accrue on outstanding rates;
• vacancy charge 50%;
• rate only challengeable by judicial review;
• rates to be within the tax clearance certificate system.

Council Funding

Local authorities funding comes from rates, government grants and services.  The annual rate is based on the residual sum, being the deficiency in funds in the authority’s budget, which is not met from expenditure, state grants, local authorities, own resources.

City and county councils are empowered to make rates.  Town councils which were former Urban District Councils and Borough Councils, had power to levy rates.

Levy of Rates

The modern day rates system is still based on the system of rates applicable under the  Poor Law (Ireland) Act 1838.  Rates are a tax levied on the occupiers of certain properties.  All lands and buildings are in principle, subject to rates. Certain infrastructure is liable to rates.

Rates are assessed on every occupier of rateable property.  The person in actual occupation at the time the rate is made is liable.  The occupier is the person or person who have the immediate use or enjoyment of the property. Where several persons are in different types of occupation, the person in paramount occupation is  liable. A person is in occupation of a piece of physical infrastructure, if he is control of it.

The occupier must be in exclusive possession of the land or buildings.  This will generally require that he is a tenant or owner.

Particulars of every rate are entered in a rates book.  Accounts must be kept of things which are liable to be rated.  Any person is entitled to take copies and extracts from the rates records.  Individuals may inspect the records and take copies.

2019 Act

The purpose of the Local Government Rates and Other Matters Act 2019 is to modernise the legislation governing commercial rates, improve the rates collection powers of local authorities, and form a basis for greater enforcement powers by local authorities in their collection of rates. The Act provides for interest to be applied where rates are unpaid; and the application of minimum charges for vacant commercial premises.

The Act also introduces mechanisms to allow local authorities to introduce targeted rates alleviation schemes. The rates alleviation (waiver) schemes are provided for in order to support the implementation of policy objectives, including: local economic and community plans; objectives contained in Development Plans and Local Area Plans; and national planning policies. The approval of these schemes would be a function of the elected members of the local authority and the cost of introducing an alleviation scheme would be met by the local authority, either through increasing income or reducing expenditure.

Valuations

The Valuation Office is obliged to value all relevant property under the legislation. The rate book is prepared on the basis of the latest valuation list.  The first valuation (Griffith’s valuation) took place in 1838, on commencement of the poor law legislation.  Valuations were not updated for many years, and new valuations were undertaken on and artificial and comparative basis, relative to existing older valuations.

The Valuation Act 2001 went some distance towards modernising and making the law on rates valuation more coherent law. Under this legislation, property is to be valued by reference to the net annual value of the property.  This is the rent which might reasonably be expected year on year.  The cost of repairs, insurance and maintenance are assumed to be borne by the occupier. An alternative method is based on the notional costs of construction. The value is fixed at a percentage (5%) of the depreciated replacement cost plus the site value.

Valuation Appeal

There is an appeal against valuations for rating purpose.  The owner / occupier or the authority itself or any person who has an interest may appeal.   It may be made on the basis of comparable properties in the  valuation list The first appeal is to the Valuation Commission.

The second appeal  is to the Valuation Tribunal. There is a  further appeal to the High Court on a point of law only, with the possibility of a further  appeals on point of law to the Court of Appeal /Supreme Court.

Making and Charging the Rate

The local authority makes the rate based at the valuations at the date of the adoption of its annual budget estimates.  Once the rate has been determined based on the valuations and the poundage (the multiplier of the total valuation of premises), demand notes are issued by the rate collector.

The rate is collectable in equal half instalments.  The first is due in the early part of the year and the second on the first day of July.   At the end of the year the rate collectors prepare a schedule of uncollected rates and a decision is made regarding recovery or write off.

Enforcement

There is a short form application to the District Court, whereby the rates collector makes a complaint, which is a statement to the effect that the rate is unpaid. The District Court may issues a warrant authorising distress and sale of goods. This Order is not a decree capable being registered as a judgment mortgage.

The local authority may obtain a decree / order for the money due.  The Council itself  (and not the rate collector) may use this procedure.  Proceedings can be bought in the District Court / Circuit Court in accordance with their limits of jurisdiction..