Why is Wellington keeping its high business differentials?

Why is Wellington keeping its high business differentials?

Property Council Wellington Branch is calling for the city to scrap business differentials and replace it with targeted rates.

The Branch made a submission on Wellington City Council’s Long Term Plan 2015-2025; opposing business differentials as they are generally not linked to any specific cost incurred. The Branch believes these charges are neither balanced nor evidence based.

If allowed to continue, they will perpetuate the inequitable and short-sighted revenue raising system which has been increasing the cost of doing business, particularly when compared to other cities.

This in turn leads to less investment and capital coming into Wellington.

The Branch is in favour of appropriately applied targeted rates that are clearly linked to specific costs incurred by businesses through a more transparent and efficient mechanism.

Branch President Mike Cole says it’s disappointing to see that instead of considering reducing differential rates as other cities are doing, the Council is proposing to keep it at a ratio of 2.8:1.

“Other cities are looking at phasing out differentials altogether, and here we are with one of the highest rates in the country. The commercial sector ratepayer is paying 2.8 times more to the general rate than residential ratepayer for each dollar of rateable property capital value.”

The Long Term Plan notes that commercial ratepayers own 21% of the city’s property but pay 46% of

the rates, which is clearly disproportionate and discourages investment. This is at clear odds with the Council’s aim of encouraging investment into Wellington.

“We need to decrease the costs of doing business in Wellington, from inefficient consent processes through to rates. Otherwise Wellington is going to lag behind, and the Council won’t achieve its own vision set out in the Long Term Plan.”

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