Good coverage by John Reynolds in the Sunday Independent on the Rates issue and our discussions with the EU competition directorate.Read More
You may be aware from the media coverage or contact with retail forecourt operators in your own constituency that there are serious ongoing issues with the current valuation process.
The revised commercial rates system has been in place now since 2017 and is currently undertaking the final phase, being phase 3 of the revaluation.
The Irish Petrol Retailers Association (IPRA) is the trade association for independent motor fuel retailers in Ireland. Our sector employs over 100,000 people and as many of our retailers are family businesses there are over 250,000 people dependent on the survival of this sector. Many of these are located rurally. We have major issues with the current commercial valuation system as it:
- treats the shop portion of service stations unfairly in comparison to convenience stores and supermarkets;
- demands financial data from service stations to calculate their valuation and bases the valuation of convenience stores and supermarkets solely on size (not turnover like service stations);
- has been amended by the Valuation Office (showing the methodology was clearly incorrect to start with) following Phase 1 of the revaluation (phase 3 recently commenced) and these concessions do not apply retrospectively to those revalued under Phase 1.
We believe the methodology designed and used by the Valuation Office for calculating the commercial rates payable by service stations is incorrect and unfair as our retailers are paying far more for the shop element of their service stations when compared with their competitors, being convenience stores and supermarkets local to them.
A short example is a 500M radius in Edenderry. Aldi has been valued at €114K, Lidl €161,300, Tesco Superstore €315K and yet the local service station (Mangans c.400sqm) has been valued at €145,600 (noting that all of these businesses are competing for the same customer footfall).
Interestingly, within this 500m radius a Tesco service station has been valued at €31,500. Given that Mangans is by far the smallest floor space (Tesco is the largest at c.5000sqm – over 12 times the size of Mangans) with a turnover a fraction of the multiples included here there is no way that anyone can claim that this system treats independently owned service stations fairly. This example is sadly, not unique.
As a trade association, our Members are not against paying rates but we do want a system that is fair and equitable and does unfairly penalise our sector. After 3 years of discussions with the Valuation Office and being dismissed repeatedly by Minister of State Phelan the IPRA was left with no choice but to involve DG Competition who are currently reviewing this issue from a state aid perspective.
We are writing to all Oireachtas members asking for their position on this issue so we can advise our Members in their respective constituency as this may influence their choice of candidate.
Please advise by return to email@example.com so we can advise our members;
Do you support the setting up of a Rates Forum in order come up with a fair Rating system for all ratepayers? We look forward to hearing from you at your earliest convenience and are always available to discuss this or provide further informationRead More
The trade body representing the forecourt sector, the Irish Petrol Retailers Association (IPRA) have today written to Leo Varadkar asking him to intervene in the dispute between petrol retailers and the valuation office. The association is concerned at the disparity in the current rating revaluation which has seen some retailers hit with increases of up to 500% when supermarkets and retail shops in the same areas are being levied with much lower increases.
David Blevings, spokesperson for the IPRA said, “The way valuations are calculated for a retail forecourt compared to a stand-alone shop/convenience store is completely different and we believe incorrect. A convenience store or supermarket is valued purely on useable floor space while service stations are valued on turnover. A retail forecourt is basically a supermarket with the add on of fuel pumps. A forecourt must submit turnover information to the Valuation Office and this is not a requirement for supermarkets; we want to know why forecourts are effectively being penalised”.
As an industry body the IPRA have lobbied on this issue with numerous TD’s, Government Ministers and the Valuation Office. However, after three years of discussions with the Valuation Office and being dismissed repeatedly by Minister of State Phelan the IPRA feels they have no choice but to involve the European Commissions’ Competition Authority who are currently reviewing this issue from a state aid perspective.
“While talk about establishing a task force was welcomed we have not seen any evidence of the task force being established while our Members are levied with substantially increased rateable valuations that could see some businesses closing. No one is against paying rates but any system must be fair, transparent and equitable. We are calling on An Taoiseach to get involved as we believe the current system could be deemed anti-competitive and penalises retailers and favours supermarkets which is grossly unfair to local family owned businesses”, added David.Read More
The Irish Petrol Retailers Association (IPRA) has given a cautious welcome to the Finance Ministers decision to increase carbon tax by €6/tonne of CO2.
David Blevings, Media Spokesperson for the IPRA said, “The increase is not a surprise given the ambitions of the Government’s Climate Action Plan. The rise is modest and will result in about 1cpl increase in prices at the pumps. The good news is that as predicted last month by IPRA, global oil costs have reduced post the Saudi spike on 16th September.
We further welcome the fact that the duty equalization of petrol and diesel did not occur – this is in line with IPRA submission to the Minister as it would impact most on the rural communities who use private transport, mainly diesel to get from A to B.
Our Members are local businesses who provide a valuable local service and are engaged in climate change and the role they have to play in the transition to a lower carbon economy.
Given the proposed evolution to electric vehicles they would like to see increased revenue from the carbon tax ring fenced to subsidise the purchase of EV’s and fund quick chargers for retail sites to assist this change. In addition, many retailers are ready to embrace E10 in petrol to further reduce emissions in transport,” added David.Read More
After the recent drone attack in Saudi oil prices are spiking in anticipation of a potential reduction in global oil supply.
David Blevings, spokesperson for the Irish Petrol Retailers Association said, “The recent attack on the Saudi oil infrastructure is pushing prices higher. However, the Saudi Government has announced that it will make up any shortfall from their significant oil reserves as has the US Government who say they will release emergency stock if required. We believe there will be a short term impact on wholesale fuel prices which will feed into an increase in retail prices.
It is hard to predict what will happen retail prices in the medium to longer term but remain confident that retailers will increase and decrease their price in tune with the wholesale market to continue to compete and retain their customer base”, added David.Read More
After a spike in oil prices on the back of the Iran incident, prices are now falling on lower crude oil costs.
David Blevings, spokesperson for the Irish Petrol Retailers Association said, “There are a lot of external
forces affecting the oil market currently. The recent attack on shipping in the Gulf of Oman pushed
prices higher. Looking forward we have the OPEC meeting in early July and the trade deal talks with
China. Any agreement or indeed disagreement at these events has the potential to drive the markets
upwards or downwards depending on the outcome.
It is hard to predict what will happen retail prices in the medium term but in the meantime we are
seeing a reduction in forecourt prices which is ultimately good news for consumers”, added David.
Up to 100 roadside service stations, many described as hubs of rural villages around the country, are facing closure because of an “extortionate” hike in commercial rates, owners are warning.
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, said around 100 independently-owned stations were threatened with closure, while many more would be swallowed up by the big fuel companies.
“A lot of businesses won’t make money, there will be no profit left,” he said. “There are rural sites particularly that don’t have enough business to keep them going.
“They would probably be the only shop and maybe the only business in the village. Some of them house the post office, they are the hub of the community. We would be seeing villages with no services.”
The Valuation Office is carrying out a national revaluation of all rateable properties.
Newly revised bills
In recent weeks, newly revised bills have been dropping through the doors of more than 30,000 businesses in Cavan, Fingal, Louth, Meath, Monaghan, Tipperary, Wexford and Wicklow.
Service stations were traditionally assessed for commercial rates based on the size of their retail space, but under the revaluation they are now being assessed on their sales turnover.
Mr McSorley, who owns service stations in Laois, Carlow and Wexford, said the rates have been set too high because profit margins were so small in the industry, while they were also being unfairly targeted compared to other retailers.
“Why only us? Why not apply it to Lidl, Aldi and Tesco and Dunnes?” he asked.
“If I have a Spar shop across the road from me that doesn’t have petrol pumps, his rates will stay at around €8,000 or €9,000 a year, while mine are going to go up to €38,000. How is that fair?”
Mr McSorley said the new rates would shut at least one of his five service stations, which just about breaks even, yet the rates bill has more than doubled from €18,000 to €38,000.
“They want 4 per cent of everything I sell in my shop. Some things I don’t even make 4 per cent profit on. It is very unfair. It is forcing us to make a loss on a large amount of items in our shop.
“We are not opposed to paying rates – we are looking for a fair deal for everybody.”
Big fuel companies
There are about 1,500 petrol stations left in Ireland. Around a third are independently-owned, with the rest operated by big fuel companies such as CircleK, Applegreen and Maxol.
Mr McSorley said many smaller businesses were refusing to pay the new rates bill, were paying the old amount instead and lodging appeals, which could last up to six months, with subsequent tribunals taking up to two years.
“The rural areas are the biggest problem. Most of those sites just about break even. They wouldn’t make the same margins on fuel that would be made in Dublin.”
Supermacs founder Pat McDonagh, whose company operates seven service stations, is spearheading plans to take the Government to court in Europe over the rates increase.
“It is just inequitable, it is unjust, it is unfair,” he said. “It is kind of extortionate to a degree that you have anything up to 500 per cent of an increase. No one can justify that.
“The rates valuation guys won’t listen to us. The council won’t listen to us – so you have to go somewhere with your case, where you will get a fair and equitable hearing. As far as I am concerned Europe is the best place to get that.”
Fast food giant
Mr McDonagh, who recently won a trademark challenge against global fast food giant McDonald’s at the European Court of Justice, said work has started on building funds to finance a case for service station owners.
“They will look at it on a level playing field basis and decide if this is anti-competitive or not,” he said.
In response to a complaint in the Dáil from Fine Gael TD Kate O’Connell that the hikes were “grossly unfair”, Minister of State John Paul Phelan said he “fully accepts” the arguments being made, and, although the Commissioner of Valuation was independent, “there are a number of things that need to be looked at again” .
“I am acutely aware of the importance of service stations, especially in rural villages where they may be the only commercial premises in some areas.”Read More
Drive offs (were customers do not pay for fuel) costs the retail forecourt sector in excess of €3M per annum and the industry is proposing a new system to combat this problem.
Scan Cam, a solution that has been developed in Australia and New Zealand is coming to Ireland and will launch at the IPRA Expo next week in CityWest.
David Blevings, IPRA spokesperson said, “We are seeing very positive signs of a recovering and thriving economy with a huge increase in convenience sales. However there is a still a major problem with drive offs and we hope to launch this new system that will resolve the problem and also free up Garda time which could be better used elsewhere.
The modern forecourt is now a specialist convenience store with fuel becoming a secondary or even tertiary product. At this years expo we have everything under one roof for the forward thinking operator from the environmentally friendly reusable coffee cup to new food to go ideas. In addition, we have the major fuel brands, associated service providers and industry relevant seminars including a showcasing of the app which will remove the stress involved in refilling your car if you are a disabled driver.
Míchael Ó Muircheartaigh, the legendary Gaelic games commentator will open the event in CityWest and it runs from 10am to 5pm on Thursday 14th March and retailers and the general public are welcome to attend”, added DavidRead More