Extra NI household rates floated as post-Covid revenue-raiser

One long-term effect of the now roughly 18-month long coronavirus crisis could be increased rates bills for householders, it has been suggested.

By Adam Kula
Wednesday, 7th July 2021, 7:00 am
Updated Wednesday, 7th July 2021, 12:20 pm
Shoppers in Belfast city centre
Shoppers in Belfast city centre

The issue is raised in a paper produced by Ulster University’s Economic Policy Centre at the behest of Stormont’s finance committee.

The paper looks mainly at the rates paid by businesses (called non-domestic rates), noting that a rates holiday had been put in place for firms during the pandemic and that many businesses believe they “would simply have ceased trading if Covid rates relief had not been granted”.

However, the paper then looks ahead to a future when the pandemic has receded, and considers different ways of trying to raise money.

It notes that Northern Ireland will face an era of “increasing pressure to reduce deficits” following the various government bail-out schemes.

And under the heading “Policy Considerations” the report suggests politicians may wish to “shift some of the burden from non-domestic to domestic ratepayers – relative to the rest of the UK, domestic ratepayers in NI are under-charged”.

It adds: “The proportion of rates raised from residents is only marginally greater than the proportion of rates raised from businesses.

“But there are significantly more residential properties than commercial properties (an approximate ratio of 10:1).”

It then goes on to set out starkly just how much lower the average NI household’s rates are compared with the rest of the UK:

> Northern Ireland: £1,036

> Scotland: £1,581

> England: £1,836

> Wales: £1,952

One of the reasons for this is that householders in Great Britain pay water / sewage charges on top of their regular rates, averaging just under £400 per home.

“Councils have been given the flexibility to set domestic and non-domestic rates independently and they can choose to set the domestic rate at a higher level,” the report says.

“In addition, the Executive could put a cap on the non-domestic district rate, and over time the burden would shift.”

The report also indicates that farmers may face a major change too .

“The economic rationale for offering 100% relief on agricultural land and buildings and not to other sectors is not clear,” it says.

“The cost of this relief is unknown but could be substantial.”

The authors note that internet shopping grew 28% in the UK in 2020, and suggests there is “a strong rationale” for a new “online sales tax – because bricks-and-mortar retailers who are the foundation of the High Street face relatively high rates bills, compared to on-line retailers in their out of town distribution centres.”

However, “introducing new taxes would currently fall outside the scope of devolved powers”.

More from this reporter:

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