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Calling All Farmers: Are You A Rates Mug?

Calling All Farmers: Are You A Rates Mug?

It's the club that no farmer wants to join.

Federated Farmers of New Zealand (Inc) will next week launch the 10K Rates Club for members unhappy about being lumbered annually with more than $10,000 in general rates.

"Increasing numbers of farmers are paying exorbitant amounts of rates which far outweigh services offered by councils to individual farmers. The 10K Rates Club will be used to confidentially collect these examples and put pressure on government to introduce a fairer way of funding local government," said Don Nicolson, a Federation National Board Member.

"Another object of the club is to profile the sometimes staggering cost of rates to some individual farmers. Rates are a problem for every property owner, but we're showing that the problem is getting out of hand for our sector," said Mr Nicolson.

"Urban ratepayers would probably be aghast to discover how much farmers pay in rates for general services not including water and sewerage," he said. "But we're all in this as property owners facing a rising tide of rates based on outdated funding methods.

"The main point is that the property value basis for funding local government is failing New Zealand. It discriminates against land intensive businesses and produces huge anomalies that councils are not willing to fix," Mr Nicolson said.

Federation members wanting to join the 10K Rates Club will have an opportunity at Mystery Creek Field Days on June 16-19. Members who bring to the Federation's stand a copy of their general rates demand which shows rates in excess of $10,000 a year will be given the official club mug, which is emblazoned with the club motto "I'm A Rates Mug". The Federation's site is in the main pavilion at PB71 and 72.

Members can also join by sending a copy of their rates demand to Federated Farmers of New Zealand 10K Rates Club, PO Box 447, Hamilton.

See Q&A below

Media Backgrounder - Q&A Why launch a 10K Rates Club?

Rural rates demands are getting out of hand for many farmers paying thousands of dollars in general rates. When general rates (excluding charges for specific rural services) top $10,000 the task of finding that money from farm income becomes seriously difficult. Getting central and local government to heed concerns that farming is heavily subsidising local government services is even harder.

The launch of the 10K Rates Club serves notice that farmers have had enough. The goal of launching the club is to highlight the massive inequities farmers face as a consequence of local government funded by land and capital value. It is also to acknowledge the huge contribution made to local services by many farm units that goes unrecognised by the community.

Why are farmers' rates so high?

The Federation has heard many examples of farmers paying over $10,000 in general rates, with some paying over $20,000 a year. The problem principally arises through the land intensive nature of farming, and the seeming inability of local government to introduce fairer funding and rating policies. Should farmers pay rates?

Of course. Farmers have never objected to making a fair contribution to their communities, but the burden of rates exceeds that. When Federated Farmers went to the membership on this issue in 2002 a number of examples came to light of individual farmers paying higher general rates than substantial urban businesses such as supermarkets and department stores. To add to these concerns, overall rates are on the rise. For the 10 years from September 1992 to September 2002, local authority rates increased by 45 percent while the CPI increased by only 21 percent. So rates have increased at twice the headline inflation rate (source: Statistics NZ).

The outlook does not improve. A survey last year by Federated Farmers on forecast rates for the five years ending June 2008 showed total rates growing 16.8 percent for metropolitan councils, 9.6 percent for provincial and rural councils, and 18.2 percent for regional councils.

A member wrote recently outlining how his general rates had climbed from $12,000 to $36,000 a year because he invested in his property to diversify, resulting in a higher valuation. But there was no increase in services. The 10K rates club aims to put these examples to the forefront of the debate on local government as $10,000 rate demands for farmers move from being the exception to the norm.

How can rating become fairer?

At its December 2003 meeting, the central and local government forum agreed that a working party be established to review and assess the merits of any additional funding arrangements for local authorities. This raises the prospect of the forum looking at alternative forms of raising revenue, rather than raising the lion's share from property value-based rates. The working party has begun its task and is due to report progress to the next meeting of the forum at the end of the year.

What are the alternatives to land-value based rates?

For example, some United States councils have broadened the number of revenue options from property taxes. Some raise money from a direct sales tax, a visitor or "hotel room" tax, and a tax on utilities such as power and gas. These are all worthy of examination if the result is less unfairly allocated property taxes and better reflect use of services and ability to pay.

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