Wednesday, 9 May 2012[Statement by David Thornton]

Residential and rural ratepayers under attack from big business lobby.

Business ratepayers are urging Auckland Council to abolish a rating differential which will result in compensating rates increases for residential and rural ratepayers.

NoMoreRates is hearing from many residential ratepayers who may be faced with 10% increases for each of the next three years, and from rural ratepayers who are paying huge rates but do not receive the same services provided or available to urban residents.

These groups of ratepayers will make up the shortfall if the business differential is abolished or reduced.

The business lobby claims it is paying 263% higher rates on business properties than residences of the same capital value, for equivalent services.

This is untrue,

The 263% ‘differential’ applies only to the general rate, and does not apply to targeted rates or the Uniform Annual General Charge, the true differential is significantly less than the 263% claimed by the business lobby.

The council supports the higher rates charged to business to reflect differences in the level of services received or used, and to reflect the ability of groups of ratepayers to pay.

Businesses create higher costs to the council, including for road maintenance due to heavy vehicle traffic, and increased storm water costs resulting from the larger impermeable surface areas associated with business properties.

The business differential also reflects the business sector’s ability to pay, because businesses are able to claim back GST from rates and to treat rates as a tax-deductible expense.

Residential ratepayers cannot claim GST back, and pay all rates out of after tax income.

It is quite obvious that businesses aim to make profits, and should not therefore be subsidised by residential ratepayers, many of whom are on fixed or low income.

This applies to councils around the country.

In our submissions to the Auckland Council draft Long Term Plan, NoMoreRates asked for rates increases to be no more than the rate of inflation and for the Business Differential to be maintained at the current level with no reduction in future years.

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