June 27, 2015 3:00pm by David Farrar

What land should pay rates?

Amidst all the Good Ideas
One notable item was that the exemption on Crown land from rates is unjustifiable. Quite so. Central government dumps regulatory burdens on local government, but is tight fisted in paying for them itself. Allowing local authorities to charge rates on Crown land would encourage agencies to use land more efficiently and would be fairer to ratepayers.

The Rating Base
Councils can charge targeted rates for water, sewage and refuse collection, but cannot levy other rates, including uniform annual charges or general rates on Crown land. One option might be to allow councils to apply uniform annual charges to Crown land. That might encourage them to not push the uniform charge down to the minimum, as has happened in Auckland.

But Which Land?
As a first cut at what might be included, and what not, conservation and recreational land could be excluded. Because schools and hospitals all compete with private organisations, they should pay rates. Road and rail network infrastructure should probably be excluded, but ports and airports are private businesses, albeit often partially owned by councils, so would be included.

And Some Controversial Areas
Land used for religious worship or education, and Maori land of various types is exempt from rates. It’s hard to see how that could be justified.

The Net Effect
Slightly lower rates burden, slightly higher central government tax burden – but better price signals and incentives all round. And fairer.

I agree there should be no rates exemption for religious or Maori land. I also agree that some Crown land should pay rates – not conservation land, but other land. It will encourage better use of the land.