“In five years time there will be businesses gone bust over this”

“What this will do is put independent filling stations out of business,” warns Cavan businessman, Pauric Rudden. The cause of his ire is a revaluation process undertaken by the Valuation Office (VO).

The REVAL2019 revaluations, which concludes in September 2019, is a new valuation list for eight local authorities. These valuations will become effective from 2020 onwards.
In Cavan 2,461 properties are being assessed. The VO say 59.6% will have reduced rates, 37.7% will see an increase and 2.80% will have no change. Roadside service stations say the rates hike they face are so extreme that closures are almost inevitable.
Currently service stations’ rates are calculated primarily on the square footage of their premises; under the new system they will be calculated on turnover. Meanwhile other businesses will continue to be charged on square footage.
Philip Kiernan operates two service stations on approach roads to the centre of Cavan Town: “Our Dublin Road site is facing a 200% increase, while our Ballinagh Road site is facing a 300% increase. My understanding is that I will be paying more rates than Lidl, they are my neighbours and they are assessed on square foot, not turnover.”
With some family-owned stations facing five-fold increases in their yearly bills, preparations are under way for a European Court of Justice challenge against the revaluation. Martin McSorley, of the Irish Petrol Retailers Association (IPRA), said around 100 independently-owned stations were threatened with closure, while many more would be swallowed up by the big fuel companies.
Pauric Rudden has also seen a dramatic increase in his bill: “The rates on my shop and fuel station in town were €12,500 per year, we undertook a number of upgrades and the rates went up to €17,500, that was a sizeable increase, but we were happy enough.
“What they are trying to do now is rate filling stations on turnover. This means that the re-rating will be around €38,000.”
In a statement to The Anglo-Celt the VO said an increase of 400% would be “unusual”. They added: “in instances where the Valuation Office has sought specific information from a ratepayer by way of a section 45 notice and that information has not been provided the Proposed Valuation entered on the PVC (certificate) will be an estimate”.
A ‘section 45 notice’ is the form on which the revaluation is based. Both Messrs Kiernan and Rudden have returned their completed forms.
Mr Kiernan says the IPRA have been lobbying on the issue: “There are service stations that are going to close. There is no way they can justify these increases. The IPRA are appealing it to the European Courts, but that’s a costly exercise.”
He claims the revaluation process lacks fairness: “I have a family business. I have a multinational company beside me and I am going to be paying more rates than them? It’s not that I am complaining about them, I’m just looking for fairness.”

Disparity

The disparity between the supermarket rates and the service station rates appears to be a common bugbear for those who have experienced the rise in their rates payment. Mr Rudden also made the point: “In total between fuel and other goods in our shop we turn over around €128,000/week before VAT. The most successful supermarket in the town has about three times that turnover in the same period, now our rates will be double their rates, because they are done on square footage.”
However the VO say the new rating system is appropriate: “Service stations are a distinct class of property and while there may be some similarity with supermarkets in the products that they sell they are not directly comparable to supermarkets. ” The VO added that the rate “must reflect open market rental values at the valuation date”.
Mr Kiernan says there are other business hit by the increases: “Pubs that do food and restaurants have been hit quite badly as well. As the Valuations Office are doing it on turnover some pubs have come down, but any pubs doing well have experienced significant increases.”
Pauric Rudden says by going on turnover the VO are cutting into tight margins: “They are going to take a half a cent on all fuel. We make, on average, 3.5c [per litre] profit on fuel. So they will be taking 1/7 of our profit on the fuel. Instead of rating us they are putting on another tax.
“It’s unfair that one section of the business community are rated on turnover and another is rated on square footage.”
Discussions by both retailers with elected reps and the local authority have yielded little optimism. The independence of the VO is pointed to by all avenues. In fact the council say that despite the changes, there will be no increase in their rates income.
The VO explained this by saying: “Revaluation is essentially a revenue neutral exercise. The total amount of rates liable to be collected by the local authority in 2020 compared with 2019 will not increase by virtue of the revaluation. There will however be an allowance for inflation.”
In five years there will be a further evaluation of rates, but Mr Rudden feels that having to bear the brunt of the increases for half a decade is unfair: “For five years they expect us to pay the high rate. You either do it for all or for none. In five years time there will be businesses gone bust over this.”