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Rates Differential Phase Down

29 June 2005

Chamber Welcomes Continuation Of Rates Differential Phase Down

The Wellington Regional Chamber of Commerce has welcomed the decision by the Wellington City Council to continue the programme agreed some years ago to phase down the differential between rates paid by business and residential rate payers. The differential last year stood at 5.5:1, however following yesterday’s decision the differential will be reduced for the 2005/06 rates year to 4.9:1.

In 2000, the Council voted to alter the rates differential that decides the share of general rates paid by residents and businesses. At that time business rate payers were paying 7.1 times more than residential rate payers for a property of the same value. The 2000 decision was to phase the differential down gradually until it reached a level of 2.8:1.

The 2000 decision was the result of close consultation between the Council, business and other interested parties. Wellington businesses were unhappy that the differential was going to be maintained and that it was going to take 10 years to phase it down, but accepted that the phase down was a step in the correct direction. The Chamber and other groups therefore agreed to give the differential policy full support. At the same time the Chamber and other business groups dropped the threat of a legal challenge to the Council’s rating differential policy. The grounds for such challenge were strong.

Yesterday’s decision to continue the phase down was fully in line with the 2000 decision. However, a number of Wellington City Councillors this year chose to relitigate the 2000 policy and tried to stop the differential phase down. In the end the phase down decision was agreed by only one vote – the casting vote of Wellington Deputy Mayor Alick Shaw.

“While we welcome yesterday’s decision, we are concerned that the vote was so close, and that so many Councillors were supporting a business unfriendly approach to the rating differential,” said Charles Finny, Wellington Regional Chamber of Commerce CEO.

“As I said at the start of yesterday’s Council meeting, we at the Chamber and the City Council are in the same game. We want to encourage existing businesses to stay in Wellington and expand their operations. We also want new businesses to establish themselves in Wellington.

If the rating differential policy had been changed and the already heavy rates burden on business increased some businesses would have left Wellington and others would have been deterred from coming here. If some Councillors had succeeded in changing the differential phase down policy, businesses in Wellington would have had around $6 million more added to their rates bills for the year ahead.”

“The Chamber is grateful for the support of those Councillors who voted for the continuation of the differential phase down, but it is a real concern that almost half the Council adopted what was essentially an anti-business stance on this important issue,” Charles Finny said.


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