Proposal to adjust the general rates differential

The average rates increase for existing ratepayers in 2019/20 is 3.9 percent. However, the forecast increase varies between each property rating category. All rating units (or part thereof) are classified, for the purposes of general rates, as either ‘Commercial, Industrial and Business’ or ‘Base’ (‘Base’ includes residential).

We currently apply a rates differential for the ‘Commercial, Industrial and Business’ rating category of 2.8 times the rate per dollar of capital value payable by the ‘Base’ rating category. In setting the level of the differential we consider the requirements of the Local Government Act and a number of factors which can be found in our Revenue and Financing Policy on our website.

It is proposed that the general rates differential be adjusted from 2.8:1 to 3.25:1 to ensure the rates for 2019/20 continue to be paid in the same proportion by each differential rating category.

In simple terms, this currently means that commercial property owners contribute 44 percent of total rates revenue in 2018/19 in comparison to ‘Base’ contributing 56 percent. Due to the change in the relative Rateable Values (which does not necessarily change the relative ability to pay) changing the general rate differential to 3.25:1 will maintain this ratio at 44 percent ‘Commercial’ to 56 percent ‘Base’.