The Irish Hotels Federation is calling for local authority rates to be applied equally across all buildings, including Government buildings, so as to ensure that the burden of rates is shared more equitably between commercial and non-commercial enterprises.

At the 65th IHF annual conference in Galway today, Mr. Jim Murphy, President of the IHF commented, "With a new Social Partnership Agreement for 2003 to 2005 - Sustaining Progress - in place, it is now an economic imperative that the Government addresses the question of local authority funding."

"A taxation priority in recent years has been to reduce Corporation Tax to 12.5%, the lowest in the EU. This was a major incentive in attracting foreign direct investment into Ireland, which has served to boost our economic growth. However the same level of attention has not been given to a now crippling business tax, which is growing at one and a half times the level of inflation."

"Local authority rates are the most regressive form of business taxation in that they are levied on a very narrow base of less than 8% of all property holders in the State. The individual performance or ability of a business to pay rates is not considered and increases in local authority rates are applied instantly, automatically and without question," added Mr. Murphy.

Rates are a form of property tax and until 1978 were levied on all property owners. However, following the Local Government (Financial Provisions) Act 1978 and a successful Supreme Court action taken by Wexford farmers, domestic dwellings and agricultural land are now exempt from paying commercial rates. Also excluded from the payment of rates are all State properties.

The classification of over half of the commercial providers of tourist accommodation (bed & breakfast operators, university hostels, short let apartments and self catering accommodation) as domestic dwellings entitles this sector to an exemption to local authority rates and gives them an economic advantage over the registered hotel and guesthouse sector.

It is conservatively estimated that should State properties and all providers of commercial tourist accommodation be added, an extra €100 million could be collected by local authorities and thereby enabling them to reduce the current charge to existing rate payers by up to 12.5%.

Such a move by Government would make a substantial contribution to reducing the cost of doing business by many family-owned SMEs throughout the country. On top of paying local authority rates, many of these businesses also pay for water, refuse disposal and other levies and charges.

The Irish Hotels Federation now calls on the Minister for the Environment and Local Government to ensure that the cost of meeting the bench marking payments to local authority employees is not funded from local authority rates but comes from efficiencies and savings.

"The hotel and guesthouse sector, like many businesses operating in the tourist market, has experienced a difficult two years. The current economic environment sees costs increasing, employees are concerned with job stability and a future that is more uncertain than it has been for many years. The time has now come for the protected public sector to take a hard look at itself rather than have increases funded at the expense of a vulnerable business sector trying to survive in a volatile open economy," concluded Mr. Murphy.

For further information contact:
Siobhan Molloy / Niamh Boylan
Weber Shandwick FCC
Tel: 01 676 0168 or (086) 817 50 66 / 086 380 9191
Email: nboylan@webershandwick.com

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