Revaluation the real ‘killer’ in council rates increases.

Minister asked to investigate new Property Value Tax system

While Auckland ratepayers express their anger at huge rates increases they need to look deeper than simply blaming council spending and waste, although both certainly impact hugely on the level of rates.

The way the Mayor and council spend public money will always be criticised by various groups, often with good reason, and wastage seems to be an endemic disease which is often exposed by rates-watchers in the hope that it will eventually be cured.

Ratepayers can extract some vengeance every three years at election time - but that will not prevent another major shift in rates bills in 2018 following another general property revaluation in 2017.

The killer in this year’s wide variation in rates bills is largely attributable to the general property revaluation which took effect on July 1st.

Added to that is the impact of the final year of converting to a single rating system across the whole of the new SuperCity, plus the new Transport Levy and the decision to impose the levy as a fixed charge rather than a percentage based on value.

Next year the effect of the single rating system will have been fully absorbed, there will be no general revaluation but the Transport Levy remains for a further two years although the Council could revise its impact by spreading the cost based on property value.

But in 2017 there will be another general property revaluation which will inevitably bring wild variations leading to another wholesale change in individual ratepayer’ liability for rates the following year.

Only a change in the valuation process will stop this ongoing three-yearly hiatus which brings so much anguish and concern, particularly to residential ratepayers.

I have therefore written to the Minister of Local Government asking her to investigate removing the general revaluation in favour of a Property Value Tax (PVT) in place of rates, which would be based on a new system of valuation in which increases in property values for local Tax would be limited to 2% per annum.

Annual Tax charges would be by way of a transparent percentage based on the new PTV

Changes in value would only occur on sale of the property or additional building which adds to value.

Real Estate agents would not be able to use this new The Property Tax Value as an indication of market value – which is the current, and often misleading, practice.

This proposal is based on the so-called Proposition 13 introduced in California in 1978 and has survived despite many attempts to change it.

Since 1978 more than half of all States in the US have similar systems aimed at giving residents some meaningful control over local government taxation and expenditure.

ENDS

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