Almost a third of all businesses in Galway City face additional costs of at least €1,000 every year under new higher commercial rates being proposed by the local authority.

Management at City Hall wants to impose a 15% increase in commercial rates – a move that would rake in an extra €6.4m to Galway City Council coffers.

The measure, outlined in a budget briefing, would result in 30% of all city businesses paying at least €1,000 more in commercial rates every year.

Most businesses (46%) would pay less than €500 extra, while the remaining quarter (24%) would be liable for increased bills of between €500 and €1,000, the briefing said.

City Councillors were told that the current Commercial Rate of 0.217 brings in €42.1m to the Council’s annual budget.

If councillors approved a higher rate on commercial businesses, the recommended rate of 0.25 would bring income of €48.5m.

Council management is proposing the increase as part of its efforts to prepare a budget for next year. If approved, the new rate would apply for at least five years.

Any increase will require a majority of the 18 Councillors to pass it at a budget meeting in November.

The management – headed by new Chief Executive Leonard Cleary, in his first budget in charge – has argued that the rate at which commercial rates are levied hasn’t increased in over a decade.

The move is needed to “ensure financial stability” of the Council, and to cover the 30% cost of inflation on expenditure since 2019, management said.

In addition to increased rates, City Council management is asking councillors to also increase Local Property Tax rates on city homes by 15%.

This extra 15% LPT was already passed by Galway County Council, after a vote at the September plenary meeting. It will come into effect next year in County Galway.

City Councillors met last week to discuss the increased LPT proposal, but a decision was deferred until this coming Monday’s meeting.

Fine Gael City Councillor Shane Forde signalled he would oppose both increases.

“How can we be looking to punish businesses and private home ownership with a 15% increase for both in the LPT and commercial rates,” he asked.

He suggested the mayoral pact who control the budget of the City Council – including Fianna Fáil, Labour, Sinn Féin and two Independents – had “lost the run of themselves”.

“Hospitality businesses are already under serious pressures due to no reduction in the VAT rate in the last budget which was poor form. The City Council needs to work with businesses who are already feeling the pinch. Why are we increasing rates on businesses when currently we only collect about 83% of the rates due.

“We should be spending more time on collecting what is owed rather than punishing hard working families and businesses with a 15% increase. This is also the pact that wants to punish tourists who visit Galway with a potential €2 bed tax on hospitality. None of the elected representatives of the current pact spoke about these tax increases during their Local Election campaigns and now want to take as much money out of the pockets of already hard-pressed families and businesses in Galway City,” Cllr Forde said.

Pictured: Chief Executive Leonard Cleary