Mrs Karen Hockley
My council rates notice arrived a few weeks ago in the distinctive City of Mitcham envelope. It’s a significant bill. The minimum rates for residential land in Mitcham are about $1,100 per year, the average rates are about $1,800 and some pay a lot more.
Council is in the middle of a compulsory rates review. This involves considering how the burden of rates should fall in the community and enables Council to make some limited adjustments.
Currently Council has a minimum rate that could be increased, decreased or removed. This minimum rate means that people who have homes that are lower in value pay more than they otherwise would and others with higher value homes pay a bit less.
Justifications for retaining or even increasing the minimum rate have been articulated by some Councillors. These include the idea that council rates are a fee for service and even those living in lower values homes should make a contribution for services delivered. Another idea is that these low value homes are rental properties and that landlords can and should pay more.
Council could also change the way it levies rates so that people with very high value homes don’t pay quite as much as they do now and more of the rate burden falls to the majority of homeowners whose homes are around the average value for Mitcham. This would mean that a few households would have a significant reduction and the majority would have an increase to make up the difference.
When faced with these types of decisions I go back to basics and first principles. The first of these is that council rates are a tax, levied by an arm of government to provide social goods and services that are shared by and benefit the whole community. It’s not a fee for service model.
Secondly all taxes, state, federal and local, should be applied in accordance with the individual’s capacity to pay. This is the equity principle. Information provided to Councillors demonstrates that property value is correlated with income and capacity to pay. This means that a rating system that increases the amount payable as property values increase is progressive and satisfies equitable principle.
Finally, the amount and timing of any tax should be known to taxpayers so that they can plan their finances and the method of collection should be efficient so that the taxpayers pay no more than necessary.
Another factor to be considered is whether councils have a role in stimulating the economy. We have heard from the Premier and from business and community leaders that councils should be investing in new infrastructure. It’s said that this will create jobs and improve and maintain the vibrancy of our commercial districts.
There is so much to consider and I’m keen to hear your perspective. Do you think that the equity principle is the primary consideration, or is it something else? I’d love to hear from you. Please call me on 0423919080 or email me at firstname.lastname@example.org.