Rates to rise up to 19%
19/04/2006 12:00:00 a.m.
These are indicative rates projections for 2006/07 outlined in the Wellington City Council Long Term Community Plan, which is out for public consultation this month.
The plan includes a shift in the way ratepayers are billed for the core council services of water supply and sewage removal, a shift which would hit the poorest homeowners the hardest, while those with million dollar houses may actually see their rates drop by up to 6%.
They key is the Uniform Targeted Rate which homeowners (excluding those on water meters) pay for water and sewage services.
Residential ratepayers currently pay a fixed charge of $125 for water, and the same amount for sewage. The remaining cost of those services is met from general rates, which climb in line with the value of a property.
The council wants to double the fixed charges to a combined $450 per year, regardless of the value of the property. The increase for lower value households will be greater because that fixed charge makes up a larger proportion of their total rates bill.
That gives an effective discount to higher value properties, says Deputy Mayor Alick Shaw, who opposes the move.
"We are simply shifting a burden from a presumably wealthy section of the community to a poorer section of the community," says Shaw.
Shaw says Council wants water and sewerage on a user pays system. However, raising the fixed charge does not deliver this, he says.
"I understand why my fellow councillors voted the way they did – so that people who use a service pay for it… [However] there’s no connection between what they pay and what they use.
"If you could charge for what people consumed, I would vote for it."
Residential ratepayers are also to be hit by the ongoing shift in the differential between commercial and residential rates.
In 2000, the council embarked on a 10-year process of shifting a larger proportion of the total rates burden onto residents. At that time the commercial sector contributed $7 in rates for every $1 contributed by the residential sector.
That differential is expected to drop to 4.4 to 1 next year, and to reach 2.8 to 1 in 2009/10.
Leonie Gill, Eastern Ward councillor was one who voted against the proposed shift in the 2006/07 differential. She says the arguments to date have not convinced her that the shift is necessary, or fair.
"There has been an argument that businesses will move away because of the rates. I don’t believe that," Gill says.
"I’ve never had a small business say to me they are going to shut up because of rates."
Gill says businesses can make up some of their rates bill in ways residents cannot.
"The business sector can claim rebates back on their tax, when residents can’t. A profitable business should recoup those rates, residents can’t."
Southern Ward councillor Bryan Pepperell says businesses in the city benefit from the rates paid by residents and that the differential should reflect this.
He voted against shifting the differential.
"The issue is the number of people that come into the city who work for the business sector, and the number of tourists. Effectively, the costs for providing for this shifts onto the residents when it is the businesses that benefit," Pepperell says.
Around 40,000 people come into the city and "use the facilities while they work", and 2.5 million tourists visit the city each year, he says.
"The primary beneficiaries are the business sector. I’ve been arguing that the shift should stop and be reset so residents don’t carry the burden."
But Shaw, and a majority of councillors, say the differential has to shift to ensure fairness to the commercial sector.
"As things stood, you could own a $1 million home in Khandallah and pay less rates than someone who had a $250,000 home in Berhampore which was being used as a panelbeating shop.
"That’s just not fair."
Submissions on the Draft Long Term Plan close on May 12. Copies of the plan and details on how to make submissions are available online at www.Wellington.govt.nz.
