Rates overhaul needed

Stratford Mayor Neil Volzke says the town’s rating structure is archaic and needs to change.

He welcomed the new government’s impending review of council funding and said current methods are not sustainable.

“Like many others, I am of the view the largely stand-alone historic method of rating people, based on the value of their property, seems an outdated practice and is in need of a major overhaul.

“This will guarantee a good debate and the opportunity to move the funding mechanisms available to councils forward into a fit-for-purpose model to meet our future needs. I look forward to the review getting underway.”

Key issues that need to be addressed include who are the users and beneficiaries of services council provides, why council provides certain services at all and central government-imposed compliance costs.

Some ideas to spread the cost could include the sharing GST revenue, fuel taxes and tourist and bed levies

“While most council costs are associated with local ratepayers, there are plenty created by non rate-paying visitors to the area and additional services that have minimal benefit for the local community that funds them.

“As another example of a broken system, let’s not forget the absurd situation of GST being applied to rates — a tax on a tax.”

The ongoing incremental cost increases of councils throughout New Zealand and the “massive” amount of infrastructure that is nearing the end of its economic life is placing a huge burden on ratepayers.

“New funding streams need to be created that will allow the appropriate level of investment to take place and spread the cost in a more equitable way.”

Local Government New Zealand president Dave Cull agrees the system is archaic and no longer sustainable, because it relies on one funding line and the majority of tax goes straight to the government .

He hopes the review promised by government is imminent and a collaborative approach can be taken in looking for answers.

He says it is not sustainable for ratepayers to keep paying for services, especially those on fixed incomes. “Billions and billions” needs to be invested in infrastructure, and other funding mechanisms needed to be put in place to pay the bill.

The fuel tax proposed for Auckland to fund transport infrastructure was a step in the right direction.