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Making our rating system fairer

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It’s fair to say we’ve been working hard to review Tauranga’s rating system over the past few years, to make sure those benefiting most from, or having a greater impact on our city’s infrastructure, services and facilities, are chipping-in their fair share for the resources they use.

Last year, after consulting with the community on our 2021-31 Long-term Plan Amendment, we increased the proportion of transport and general rates paid by the commercial sector to better reflect the use of our roads by the commercial sector.

While this brought us more in line with other metro cities, it’s notable that our ‘commercial differential’ is still comparatively low, which recognises that many small and medium-sized businesses continue to struggle in the current economic climate.

This year, we’ve done a deeper dive into the definition of the commercial sector, which currently includes land which is primarily used for commercial, industrial, port, transportation or utilities network purposes, plus any land z categorised as residential.

When the new elected council takes office in July next year, we want to provide them with a clear plan which has been consulted with and endorsed by the wider community.

We’ve come up thinking that this is a broad-brush approach to things that don’t necessarily fit together, like shipbuilding factories and second-hand bookshops. As a result, we’re proposing to introduce a new industrial rating category that better compares apples to apples, and considers the overall use of our infrastructure, and in particular, the transport network.

The new category, which would include industrial, port, and transportation or utilities network activities, would increase the proportion of rates these businesses currently pay under the broader commercial sector category from 2.1 times the residential general rate to 2.7 times the general residential rate.

That would reduce the proportion of general rates paid by the residential and commercial sectors, which we believe would contribute to a fairer rating system.

We want to know what you think though, so we’ll be discussing this proposal, along with other possible new funding approaches, during our formal 2024-34 Long-term Plan (LTP) consultation, from 15 November to 15 December this year.

Our intention for this LTP is very much to continue to focus on delivering and finishing projects that we have planned and started. All the things we set out to achieve close to three years ago still apply, such as investing in the quality of life for people who live in Tauranga, increasing investment in important infrastructure to keep the city functioning and moving forward, and delivering on agreed priorities.

When the new elected council takes office in July next year, we want to provide them with a clear plan which has been consulted with and endorsed by the wider community.

Like any business, we’re facing the effects of inflation, higher interest rates and increased project capital costs. This means it costs around 20% more to run our business now, and that we need to find new ways of funding the city’s growth.

A recent review into the future for local government in Aotearoa New Zealand recognised that the existing funding model is not sustainable or affordable, and most councils are struggling, just as we are, to balance rates affordability with achieving the outcomes our communities need.

We know that relying on rates and introducing new revenue tools will not be enough to solve the problem in the long run, but we also know that an improved local government funding system is likely to take some time to be agreed upon and implemented, so we’ll have to continue operating within the current framework for the time being.

That’s going to mean making some tough decisions and we’ll need your help, but we’re confident that together, we can create a vibrant, well-planned city with people at its heart, and fairly-allocated running costs to boot.

Related: Tauranga City Council

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Anne Tolley
Anne Tolley
Tauranga Commission Chair

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