Tuesday 1st December 2009

Hotels Need Emergency Relief from Local Authority Rates

Excessive Local Taxes Amount to an Unfair Burden on Enterprises

The Irish Hotels Federation (IHF) today called on local authorities throughout the country urgently to exercise their powers to establish emergency waiver schemes in respect of local authority rates payable by the seriously wounded hotel and guesthouse sector.

The IHF stated that hotels and guesthouses were operating under an inequitably run system of ratings that was crippling businesses with excessive, out-of-kilter levies that were based on out-of-date information.  

The IHF also pointed out that the inability of most hotels and guesthouses to pay rates at current levels could have been ameliorated had the rating system in the Valuation Act 2001 been rolled out in a proper and timely manner.

Matthew Ryan, President, IHF, states: “Hotels and guesthouses are struggling to pay over €90 million in rates levied by local authorities in 2009. These excessive taxes amount to an unfair burden on enterprises that are already facing disastrous conditions and barely surviving. In effect, most hoteliers are operating under an aggressive taxation system that imposes an inequitable burden in circumstances where there is also a clear inability to pay.”

With regard to the inability to pay, the recent IHF-commissioned Report by Peter Bacon & Associates on the hotel and guesthouse sector indicates that the sector is now insolvent when taken as a whole.

The IHF states that the current exorbitant levels of rates are a result of the slow pace at which new valuations have been carried out by the Commissioner of Valuation since the 2001 Act came into effect.  Mr. Ryan comments, “Our call for an emergency waiver is backed up by our experience in South County Dublin, one of only 88 Local Rating Authority areas in which a revaluation has actually been carried out.  There, the recent revision of rateable valuations resulted in an average reduction of over 30 per cent in the rates liabilities of hotels.

 “Every indication tells us that this level of downward revaluation would be replicated across the country. Unfortunately, however, if the current inexplicably slow national revaluation process* is anything to go by, it will take over twenty years before similar revisions are completed in every local authority area throughout the country. We are no longer prepared to tolerate this situation.”

The IHF is now urgently calling on each local authority immediately to enter into arrangements with individual hotel and guesthouse owners to facilitate the payment of reduced amounts in a manner that recognises both the inability of enterprises to meet current local authority rates, as well as the fact that this inability could have been avoided had the statutory revaluation process been carried out within the timeframe originally envisaged.

The IHF maintains that, under the Local Government (Rates) Act 1970, local authorities can introduce schemes of waiver in respect of all or a portion of rates that would otherwise be due by certain ratepayers or classes of ratepayers, if to do so is in the interests of preserving struggling businesses in their areas. The IHF is therefore now calling on each local authority to introduce such a waiver scheme for the hotel and guesthouse sector and to waive at least 30 per cent of the rates liability for 2009. The IHF maintains that the position will have to remain under review thereafter.

The IHF states that hotels and guesthouses are important economic drivers in every village, town, city and county. As vital local enterprises, they employ almost 60,000 people across Ireland, and are an essential component of Ireland’s tourist industry, which contributed €1.5 billion in taxes in 2008 alone.

“Hotels and guesthouses across the country are in survival mode. Failure to facilitate hotel and guesthouse owners in the manner demanded will drive many enterprises out of business, in which case local authorities risk losing a substantially greater amount of revenue as businesses are forced into liquidation, receivership or examinership,” adds Mr Ryan.

*Envisaged under the Valuation Act of 2001 which came into effect in April 2002.

ENDS

FOR INFORMATION:

Siobhan Molloy / Eoin Quinn              Tel: 01 6760168

Weber Shandwick                              Mobile: 086 817 5066 / 087 233 2191