Rates Payments/Calendar

Rates Calendar
Early Payment
Penalties
Objectives of the Rating System
The Rating System
Targeted rates
Capital Expenditure

Rates Calendar

Rates invoices are produced on a quarterly basis and are due for payment on the following dates:

Covering the Financial Period 1 July 2009 to 30 June 2010

It is entirely up to the individual how they pay their rates.  The full amount can be paid on a quarterly basis, or instalments can be paid monthly, bi-weekly or weekly.  Council accepts automatic payments, direct debits, telephone banking, internet banking payments, cheques and cash.

Early Payment

Sections 54 and 55 of the Local Government (Rating) Act 2002 empowers Council to accept early payment of rates.

If you pay your rates for the current year in full before the due date for the first instalment, you will receive a discount of 2.5%.

Penalties

Council will charge the maximum penalties for unpaid rates in accordance with Sections 57 and 58 of the Local Government Rating Act 2002.

Objectives of the Rating System

The objective of the rating section is:

• To ensure that the cost of rates are spread as fairly and equitably as practical to provide sufficient revenue to cover operating and capital expenditure not covered by other sources of revenue.
• To ensure that policy complies with the relevant legislation.

In developing its Revenue and Financing Policy, Council made an assessment of the public good and private benefit generated by each service provided.  Arising from this assessment, Council identified the portion of cost for each service to be funded from rates revenue.
Considerations

In selecting a rate for each service funded wholly or partially by rates revenue, Council considered and sought to reflect the following principles:

• Council activities - incorporating the principles of community outcome, patterns of benefits in public goods/general equity, the beneficiary pays principle, inter-generational equity and the exacerbator paying for negative effects they cause.
• Funding sources for each activity – ensuring that, in addition to a community outcome, there is fairness and equity, significant adjustment difficulties are balanced and comply with Council policy and are in the best interests of ratepayers and residents.
• Funding system for Council – the aggregation of funding for each activity is modified to take community wellbeing into account.

The Rating System

The legislation provides for different ways in which to levy a general rate.  However, there is no legislation that directs Council to favour one method over another.  The key is to select a method that is effective, efficient and transparent for the District in allocating the cost of the general rate.  The options available are:

The Annual Value System requires valuations based on the rental value of property to be updated annually.  This method is not considered suitable for a mixed rural/urban district.  The Auckland City Council uses this system.

The Land Value System is used by a number of local authorities.  The cost of rates is based on the value of land without taking into account the value of any improvements.  However, land value is somewhat notional as a large number of properties have been improved.  Urban ratepayers expect to pay similar rates to their neighbours and, as such, land value rating is seen to be more fair and equitable than the capital value system.  The opposing argument to this approach is that the activities funded from the general rate are principally public goods and, as such, Council is levying a tax, not pricing services.  Land value rating penalises owners of vacant urban property and tends to shift the cost of the rates burden from urban property owners to rural landowners with much higher property values.
 
The Capital Value System is easy to understand, in that the total value placed on each property (land and improvements) is closer to the market value.  As with the land value system, there are points for and against this system.  There is the perception that the capital value system moves the rates burden from rural to urban property owners and, in addition, that it penalises commercial development, whether urban or rural.

In summary, anomalies will always be present, whatever system is used.  The Capital Value System is the system currently in use in the South Waikato District.  This system suits a mixed urban/rural district with a significant range of land values, better than the land value system.

Targeted Rates

Council tends to use targeted rates for services where there is a high level of public good and/or where it is difficult to identify benefiting individuals within the District.

Council uses targeted rates when it is appropriate to collect revenue from one or more groups of ratepayers who receive a specific localised benefit.  The services to be funded by a targeted rate include:

On a Capital Value Basis:

• Stormwater services.
• Putaruru CBD Rate

On a Uniform Basis:

• Additional dwelling(s) rate.
• Hall Rates (within each hall rating area).
• Putaruru Promotion Rate
• Refuse collection.
• Tirau Community Board (Ward).
• Tokoroa CBD Rate.
• Tokoroa Promotion Rates
• Sewage disposal.
• Water supply.
• Add Recycling Rate (within each recycling rating area)

Differential Rates
Council may introduce differential rating using classifications relating to the following factors:

• Land use.
• Zoning.
• Property size.
• Property location.

All such matters are provided for in Schedule 2 of the Local Government Act 2002.

Council is open to considering ratepayers’ submissions on differential rating where they can substantiate that the rate burden without a differential would be so anomalous as to be unreasonable, taking into account the dual nature of rates as both tax and service charge.

Council has been able to operate a rating system that appears to meet the requirements of the revenue and financing principles outlined previously, without resorting to differential rating, and is of the view that that situation has not materially changed.  For this reason, Council will not set rates differentially.

Capital Expenditure

Capital expenditure is funded from rates revenue, reserve funds set aside for this purpose, loan finance and investment income.  The specific source of funding for capital projects is contained within each year’s adopted financial forecast in the Long Term Council Community Plan.

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