‘Extortionate’ rate hikes mean dozens of local service stations face closure

‘Extortionate’ rate hikes mean dozens of local service stations face closure

28th May 2019
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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.”

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