Prosper Australia recently surveyed all Victorian local government candidates on rating issues. The survey has now closed and the results are in.
Our aim in designing the survey was to avoid leading candidates to our preferred position and to present the matter in clear and simple terms.
While every candidate cannot be expected to be a rates expert, they are now aware there are genuine rate options available and, all things being equal, ought choose the most economically efficient and socially just system.
Capital Improved Value or Site Value Rating
CIV rates land and improvements. Bigger and better houses pay more. This may seem fair until you turn the argument around: underdeveloped and vacant land is being subsidised. There is a transfer of value from those who put land to its best and highest use to those who do not.
SVR rates the land on its market price. Valuable lots pay more. The main reason certain land parcels are worth more is the civic investment around them: superior access to community facilities and commercial activity. Land held underdeveloped or vacant displaces activity to less attractive sites, imposing costs on us all.
Minimum Rates
A minimum rate increases the charges on low value sites and reduces the burden on high value ones. It may seem logical to base charges on ‘user pays’ but in practice, higher charges on the owners of low-value sites is a direct subsidy to the owners of high value land. This mistake is being enthusiastically embraced in Queensland, shifting the rates burden onto the owners of unattractive land, usually those least able to pay.
Differential Rates
There are currently political moves to charge differential rates on land uses council wishes to discourage – vacant sites, brothels and gambling are clear examples. This requires council to make finely balanced moral judgements on all land uses, not merely on the most offensive or upon clear cut cases. Should a differential rate be applied to a motorcycle repair shop that attracts unpleasant noise and rough men in leather jackets?
Councils using SVR automatically charge more for offensive sites as they command higher rents: A hotel with a gambling licence has a higher land value than an identical hotel next door. The land price is the base on which SVR is measured and apportioned.
Zoning recognises and regulates much unpleasant activity and provides a sound basis for higher and lower charges.
Rubbish Charges
Local government is plagued by its responsibility to remove garbage. Volumes continue to grow and disposal is becoming more and more difficult each year. The temptation to charge separately for this difficult task is enormous. A garbage charge is a de-facto tax on improvements that again reduces the burden that ought be borne by land.
We again thank all candidates for standing. Democracy relies on participation. Their willingness to offer themselves, prepared to make the hard decisions on behalf of all, is the act of a committed citizen.
