Reducing the ratepayer’s burden
Tauranga City Council is proposing a restructuring for how it collects the rates, so the impact of the big increases planned over the next three years don’t all land on the lower end residential ratepayer as they do now.
The rates increases for domestic ratepayers over the next three years if the current system remains in effect are; 9.7 per cent next year, 8.1 per cent in 2020, and 8.6 per cent for 2021/22.
But if the proposed changes survive the public consultation process, the impact on residential ratepayers will be reduced. The example given is a $500,000 capital value house that will pay an extra $127 a year, $2.43 a week or a 5.5 per cent increase instead of 9.7 per cent.
For the average commercial ratepayer with an $840,000 capital value property the impact is greater - an extra $1,117 a year, or $21.49 a week or 28 per cent.
The argument is the existing system is unfair. Residential ratepayers with lower valued properties are paying a larger share of the general rates bill than any other major city in the country, while the commercial ratepayers own 17 per cent of the capital value of property in the city they only pay 14 per cent of the general rates, mainly because the uniform Annual General Charge is set at 30 per cent.
The UAGC is paid by all ratepayers as a fixed charge on each property. The 30 per cent of total rate that Tauranga City Council receives from its UAGC is the highest proportion of any metro city in the country, and it means people in lower value properties pay a larger share of the total rate, because the UAGC is divided up across property numbers and there are more cheaper properties than there are expensive ones.
The council is proposing to reduce the UAGC to 15 per cent and to introduce a differential rate – commercial properties will pay more – like they used to in Mount Maunganui Borough before it was amalgamated into the city.
The changes are expected to reduce pressure on residential ratepayers with lower value properties and ensure owners to higher capital valued properties will pay more on the city’s increasing costs.
Council staff estimate it will bring about a rates reduction for 38 per cent of ratepayers. For 40 per cent the increase will be smaller and 22 per cent will pay more, mainly the owners of higher value residential and commercial properties.
The council is offering the use of a rates calculator on its website where the impact can be assessed on individual addresses.
“That allows people to go online and actually look at the individual impact of the rating proposals on their own particular circumstances,” says chief financial officer Paul Davidson. “People can actually get that information through that calculator.”
The council is also proposing two new targeted rates, a resilience rate, which looks like a consultants’ slush fund - and a city centre targeted rate to help pay for upgrades to the city centre streetscapes and waterfront.
The resiliency rate is explained as covering the cost of investigations to better understand the city’s resiliency issues and identify priority capital work to identify those issues.