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Rotorua councilors fiddle to prevent rating change

Wednesday, January 30th, 2008

Rotorua councilors fiddle to prevent rating changes

Proposed ‘improvements’ to the rating system in Rotorua would result in no change for Rotorua business ratepayers.

“The Rotorua council’s latest rates proposal fiddles with its revenue figures to make sure no change will result on where the council gets its income from rates,” said Alasdair Thompson, chief executive of the Employers & Manufacturers Association (Northern).

“Before the latest review, Rotorua’s rates revenue was based on Land Value with 59 per cent of rates income drawn from residential ratepayers, 12 per cent from rural, 26 per cent from business and the rest (3 per cent) from other sources.

“After adopting the recommendations of the Shand Inquiry into Rating from last year, the Council applied Capital Value, we were pleased to see the figures become 56 per cent, 22.5 per cent and 15 per cent respectively.

“Then the council applied a business differential against business to restore the relative percentage income figures almost back to where that started. The percentage of rates revenue has gone back to 59 per cent from the residential sector, farmers at 12 per cent and business at 24 per cent.

“The council has not had the courage to abolish the business differential.

“They have fiddled the books to bring about no change!

“In doing so the Council is accepting one of two key recommendations of the Government Inquiry into Rates last year. The two recommendations were:

 Move from using land value to capital or annual value of a property to calculate its rates; and  Abolish the business differential (where businesses are rated more than other ratepayers though they use no more council services than residential or rural ratepayers).

“After 18 months considering the change, the Rotorua council appears to want to change its rating system to Capital Value but not take on board the consequences of the change.

“The Shand rates inquiry last year resulted from an outcry about excessive being proposed around the country.

“Some councils said they would be charging average increases around 11 per cent a year compounding for the next 10 years.

“Government has not yet indicated its official position on it though a decision is likely to be announced in mid February.

“The Local Government Act also requires councils to review rating systems periodically and they should take into account the recommendations of the Inquiry when doing this from now on.

“There’s still time to change and there’s still time for Rotorua businesses to put pressure on their local councilors.”


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