17 October 2012

The survey of Victorian local government candidates conducted by Prosper Australia ahead of the 26 October election reveals few candidates understand where and how councils are funded.

“We learned only a handful appreciate Site Value Rating is a superior rate base to Capital Improved Value,” Prosper Australia Campaign Manager David Collyer said today. “Prosper has a big education task ahead of it.

“Under Capital Improved Value rates, a land speculator typically gets a 30 per cent discount in rates over the family home.

Land speculation drives sprawl. It forces government to spend more on infrastructure. And it makes commuting times and costs much higher.

“This very poor ratings system is one of the many factors driving up land prices. Government at all levels has a civic obligation to ensure land is available to all on reasonable terms.

“In Australia, land should be dirt cheap. Yet Victorian Local Governments have been coerced into a rates system that advantages the owners of under-used and high-value land.

“There is an alternative, and councils can choose. The centuries-old Site Value Rating is based on the market price of land. Rates on buildings are a tax and discourage construction. Rates on land are a charge against the economic rents created on the land. There is a world of difference in these bases.

“A return to SVR would mean family homes and sites held vacant pay the same amount, and end this taxation of home improvements. There is considerable evidence construction activity and employment levels are higher where councils use SVR.

“We are shocked that some candidates want property rates removed and council funded from an increase in the Good and Services Tax. Council rates are highly progressive while the GST is mildly regressive. This also violates the federal principle that each level of government is responsible and accountable to voters for its own revenues and expenditures.

More information about these rating issues and the principles underpinning our arguments can be found at: http://www.prosper.org.au/rates/

See candidate responses grouped by municipality at: http://election.prosper.org.au/ Please click on the candidate’s name for individual comments. Prosper’s survey was boycotted by party-affiliated candidates as known members of The Greens, the ALP and Liberal Party comprehensively chose not to respond.

Media Comment: David Collyer 0413 248 193

About Prosper: Prosper Australia is a tax reform lobby group and think tank that is now 120 years old. It seeks to move the base of government revenues from taxing individuals and enterprise and capture the economic rents of the natural endowment, notably through Land Value Tax and Mining Tax.