The arrival of an unrealistically high rates bill on the doorstep has the potential to crush a struggling business and put jobs at risk, says Galway Chamber of Commerce CEO Michael Coyle, who is calling for Galway’s local authorities to relieve the severe burden placed on businesses.
It may be a new year but for many businesses throughout Galway city and county the difficulties experienced since the downturn in the economy, coupled by the recent freezing weather conditions and reduction in footfall during the Christmas shopping period, continue to be felt and added to this is the pressure to pay commercial rates and high rents for premises.
Speaking to the Advertiser Mr Coyle said that the Galway Chamber of Commerce has and will continue to strongly call on the city and county councils to reduce their commercial rates which is placing an extreme burden on small businesses and take the initiative by merging some sectors, pooling resources, and fully examining other cost saving measures.
“The rates are a tax on being in business. We have called for the councils to reduce the rates by 10 per cent, however the city only gave a token reduction of one per cent while the county did not give a reduction at all. The city council’s total budget was close to €86 million, of that the council expect ratepayers to pay €33 million. That’s an extraodinary high financial burden which is mostly placed on small businesses such as bar, cafe, and shop owners. In terms of the county council €20 million of the budget is given by ratepayers, that’s a significant burden of cost that businesses have no control over.”
A meeting organised by the Galway Chamber of Commerce was held before Christmas and businesses were given an opportunity to air their views, and discuss the difficulties they are facing. Mr Coyle explained that two things were clear, that the responsibility for the €33 million in rates was left on the shoulders of just a few and that the local authorities must, as a matter of priority, drive efficenciencies in their organisations and look at opportunities where cost savings can be made.
“I know of a hotel in the town whose commercial rates bill is €200,000. People have a statutory obligation to pay the bill so the hotel has to find €200,000 and unfortunately this means after exhausting all other options it has to look at the payroll, to possibly let people go and reduce wages. This is where the rubber hits the road. It’s time that the councils and the local councillors woke up to the realities of how difficult it is for businesses now.
“We have called for the councils to look at sharing services and pooling resources and therefore reducing costs but it has been rejected by both. Because of the national need to tackle costs they could be told to do this in the near future so why won’t they take the initiative now in order to reduce the burden on ratepayers. A decision was made to reduce the VECs from 34 to 20, this is going to happen in local government. They need to get ahead of the curve in the interest of supporting business. It’s an absolute priority for everybody if at all possible to save jobs and help businesses to do that but the arrival of the rates bill on the doorstep is putting jobs at risk,” said Mr Coyle.
Regarding the effects of rents on businesses in the city, Mr Coyle said that businesses particualrly in the retail and hospitality sector were the hardest hit. Mr Coyle said that over the last number of years chamber members have expressed concern over the “unrealistically high rent levels” and that the ability to meet these commitments “have diminished greatly because of less access to credit and reduction in footfall”.
“It wouldn’t have been unusual for businesses to have entered into contracts of three to five years but economic conditions in 2006 or 2007 were vastly different to what they are now. The rent levels are extremely high. Some businessess have managed to re-negotiate with landlords who have realised that it is better to accept a lower rent than have premises empty... of course some landlords paid top dollar for the premises and have their own commitments to the banks which require high rents. It’s a vicious spiral of commercial committment,” he said.
Echoing calls for flexibility in commercial rates this week was Fine Gael Dáil candidate Senator Fidelma Healy Eames who said that many businesses have struggled to keep up with payments. She called on the councils to be more flexible in dealing with businesses when the cost of commercial rates is the difference between staying open and shutting down.
“Having visited Clifden over the New Year’s weekend, I learned that five separate businesses had recently closed down. The biggest cost singled out as having had an impact on the closures was commercial rates. I am calling on Galway County Council to be flexible in dealing with businesses and to explore ways that businesses are supported to stay open. Closed businesses mean no revenue at all for councils. It is time we took a broader and longer view on the issue of commercial rates as the means to funding local government. I will be writing to the county manager, Martina Moloney, and to the city manager to explore this issue further. Commercial rates is an issue affecting city and county,” she said.
