Auckland Council has defended its plan to lower commercial property rates over the next decade – despite homeowners in some parts of the region facing rises of up to 10 per cent.
Under changes proposed in the draft Long Term Plan (LTP), urban business would have roughly $2.8 million a year wiped from its rates, starting in 2013 and ending in 2022.
The shortfall to council finances will be picked up by other ratepayer groups.
Penny Webster, chair of the council’s strategy and finance committee, says the move is necessary to encourage business.
“Over 10 years you’ll get more business and more rates,” says Webster.
But David Thornton, of No More Rates, has described the council’s move to incentivise business by lowering their rates differential as “absolute nonsense”.
“It’s not the job of homeowners to subsidise the development of business.”
Business ratepayers have traditionally had higher differentials because they are deemed as more demanding on council services such as roads and storm water. They can also afford to pay more, as most claim back GST on rates and treat the charges as a business expense.
The draft LTP suggests reducing the business differential ratio by 0.1 per year over 10 years.
Webster says amendments to the differential would require “smoothing out” across other sectors, but has no idea how the potential changes could affect suburban ratepayers.
Alex Swney, chief executive of Heart of the City, is sceptical a business differential is even justified, and maintains the work done to calculate the ratio is inadequate.
Swney says the current model of funding local infrastructure through rates is unsustainable and suggests a wider funding net than just property taxes.
Thornton has called on the council to delete the proposed changes from the plan and re-examine the issue in the future.
Approximately 2800 submissions have already been received on issues affecting Auckland in the draft LTP. Submissions close at 4pm today.