Monday, 3rd March 2008

HOTELIERS CALL FOR FAIRER LOCAL AUTHORITY CHARGES

The Irish Hotels Federation (IHF) today slammed taxation imposed on hotels by local authorities as being archaic and anti-competitive. Speaking at the IHF’s 70th Annual Conference in Kilkenny, President of the Federation, Annette Devine stated that hotels and guesthouses are being penalised by an antiquated taxation system of commercial rates that sees local authorities extract taxes relative to the size of premises without any recourse to the level of turnover or overheads of the business.

Ms Devine states, “We remain disappointed that the current Government has continued to ignore this anomaly, which is completely out of touch with the reality of business today. Thanks to technology and greater efficiencies, many businesses and professions generating substantial turnovers operate out of significantly smaller premises. It is inequitable that our industry continues to contribute in a non-proportional way to local authorities with commercial rates being imposed with no reference to income yields and associated overheads. The reality is that the hotel sector is disproportionately subsidising local authorities and their services.”

Over the period 2002 to 2007 the annual rateable valuation multiplier* for the five city councils increased by between 14% and 30%, while the CPI increase over the period was 17%. Four of the five cities had multiplier increases of over 22%. Of 36 county councils and city councils only four had increases in the 2007 annual rateable valuation of 2% or less as proposed by IHF. The other 32 exceeded the proposed limit. The four were Limerick 1%, Wexford and North Tipperary, 2%, and Dun Laoghaire-Rathdown, no change.

            “The erosion of competitiveness continues to be a major problem for the tourism sector, particularly in light of increases in local authority charges and taxes. Given the regional difficulties now being encountered by the sector, the current system of seeking excessive revenue from business to fund local Government cannot be sustained. We’re calling on the present local authority rates system to be abolished and replaced with a local income tax based on profitability as opposed to property valuations to pay for the provision of community based services,” says Ms Devine.

The IHF welcomes the recent establishment by the Government of a Commission on Taxation to review the structure and appropriateness of the current taxation system.However, it stresses that the Commission should not be used as a delaying mechanism for reform of local authority funding. It calls on the Commission to examine the introduction of user charges for both businesses and households where levels of use can be determined for services such as water provision, waste collection and planning fees. It also maintains that central Government should fund local authorities for social services such as social housing and assistance to the elderly and the disabled rather than relying on business tax inputs to local authorities for this funding.

The tourism industry is this country’s biggest indigenous employer with approximately 140,000 people employed in the sector. It is a major contributor to the economy and remains a substantial economic asset worthy of significant ongoing public policy support. In 2007, the Exchequer received €2.8 billion in taxation from tourism and, allowing for indirect and induced effects, tourism accounted for 4.0% of GNP.  It provides employment in every single city, town and village in Ireland resulting in underlying benefit to local authorities in terms of local business and income generated.

*Annual Rateable Valuation Multiplier 2002 – 2007, Cities

Source: Dept of the Environment, Heritage and Local Government

(The Annual Rateable Valuation Multiplier is the figure used to calculate annual rates payable by an occupier of a rateable property taking the valuation of the premises into account. It is fixed by elected members of each Council on an annual basis.)

ENDS

FOR INFORMATION:

Siobhan Molloy/Eoin Quinn                Mobile: 086 8175 066 / 087 2332 191
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