IS THE PRESENT PROPERTY RATING SYSTEM FAIR AND EQUITABLE?? THE WAIMAKARIRI CONCERNED RATEPAYERS GROUP THINKS NOT!

Consider the following:Over recent decades local body rating has escalated alarmingly and is now nearing a point of un-affordability for many ratepayers. There is now considerable disquiet about this state of affairs and the serious inequities that the system produces. Questions have arisen as to whether a better system may be possible. Currently Local Government NZ (LGNZ) (representing all 78 councils) is maintaining that it is the best system on the basis that the value of a property is a reliable measure of wealth and therefore a measure of affordability. We consider that they are wrong and that their stance is simply because they do not want their open ended system to be controlled. They simply want the power to spend all they want and to demand the required funds as they wish. To begin we must firstly understand that RATES are a DEMAND TAXATION that takes no account of a persons ability to pay. This method of taxation on properties comes from as far back as the Romans and is little better than Legal Robbery. We differ from those times only in that we do not use soldiers to collect the rates. The system has come down to us through the centuries with one very clear example being William the Conqueror's Doomsday Book. And so it eventually became the method used in New Zealand during the early pioneering and development years when land was being divided. Roads had to be mapped out and formed, work which was very much to the benefit of the early settlers, particularly those in the farming sector. In those circumstances and times it was probably the only suitable system. So it came about that rates were demanded on the basis of property valuations. At the time most properties were owned by farmers and other business interests. Workers, many of whom worked on farms, generally did not own their own homes. But demographics have changed with the times. Most families now own their share of paradise and consequently councils are now providing services and amenities far beyond that which was provided by the early Roads Boards. Unfortunately the rating system has not changed with the times and circumstances. So we still have this outdated system of rate demands being charged only on the owners of properties. They are rated on the basis of their property valuation (which is at best only bureaucratic guesswork) and which often has no bearing on the ability of the owner to pay. It is very clear that it is an unsatisfactory system. It is regrettable that LGNZ still consider the system to be infallible and, while they know full well of the inequities and anomalies, they continue to ignore them. In short, the present system means that the rates burden is born by a minority of residents. In the Waimakariri district, for instance, the statistics reveal that approximately two thirds of residents pay nothing!`

Then among those who are ratepayers there are many inequities. A major example of this is the situation between the rural and urban communities. For example, there are many farmers living on shingle roads and many kms away from urban facilities who are paying $20,000 or more annually, and on the other hand many urban property owners paying around the $2,500 - $3,000 mark who are able to enjoy a wide range of benefits. But then again, even in the urban areas we still have a multitude of inequities as the following random example will show:Imagine two homes with approximately the same rating valuation. One is a sole owner occupier and could well be a single superannuitant with little extra income. The other could be a home of a family four or five adults, most of whom could be income earners. The two properties would have about the same amount of rates to pay and they have access to the same services. But which would have the greater potential usage and which is the most likely to be rated above his ability to pay? It is obvious that property value rating can never be fair and truly equitable. And it is very clear that the value of a property often has no bearing on the owner's ability to pay. SO WHAT IS THE ANSWER? The only likely alternative to property valuations would appear to be a system based on incomes. That is to say current rates could be replaced by grants from government from income tax collection. All income earners throughout NZ would thus be contributing, according to their various tax brackets. With many more people contributing the burden would be spread in a more equitable way. The immediate advantage of this would be that the ability to pay is automatically taken into consideration Obviously rates would then be non-existent. There would thus be no tax credits and GST refunds such as those currently available to business taxpayers. This would go some way to offset the extra tax that would be required for the system to operate. The extra tax of which we speak has been calculated, on the basis of statistics for the year ended June 2010, as 2.475 cents in the dollar. Obviously no system will ever be perfect for all but from discussions we have had with several ratepayers they all express preference for the income based suggestion. The losers would mainly be those with no real estate and therefore cannot be rated. But that is what makes it fairer; all those with the opportunity of enjoying the benefits of council utilities and services would be paying their share with their ability to pay being based on whatever tax bracket they are in. That is to say those on lower incomes would be contributing at a lower rate than those who are a bit more fortunate. There would be other beneficial spin-offs as well. A good example would be that of the earthquake stricken City of Christchurch where there are many people who are unable to live in their homes but are still liable rate demands. Clearly this would not have been the case if the system we are promoting had already been in place.