Editorial: Council needs to meet halfway

Councillor Murray Guy raises an interesting point in challenging the penalties charged by Tauranga City Council for late payment of rates.

He argues the penalty is too high when interest rates are so low and that it should be reduced to a figure closer to the interest rates paid by the council for its money.

According to Cr Guy, the 10 per cent legal maximum is almost twice the council's finance cost and it would be fairer if the penalty was 7.5 per cent.

Council figures show $500,000 of last year's $3.7 million rates surplus came from penalties.

In total, 3627 customers incurred penalties of $322,000 for this year's first rating instalment - an average of nearly $89.

While the average cost to individual ratepayers doesn't sound excessively high, there is a matter of principle here.

In short, things have changed and it appears the council has failed to adjust along with those changes.

In the not so distant past, ratepayers were willing to incur the penalty if it meant they could leave the money in their bank, earning interest for a longer period.

This, of course, was when interest rates were high.

The reasons for late payments nowadays, I suspect, are likely to be more about a lack of money than any bid to cash in on surges in interest rates.

While the economy is showing some positive signs, it's no secret that it's been a tough few years on the economic front for many families.

Things have changed and many people are finding it hard to make ends meet.

The 10 per cent penalty - the maximum that can be charged - does seem excessive in today's economic environment.

Every little bit helps when it comes to the family budget and it seems that, while many families are having to trim their costs and make adjustments, the council has so far been unwilling.

I agree with Cr Guy's view that a fairer system would be to set a floating penalty rate linked to actual interest costs.

Mayor Stuart Crosby suggests that Cr Guy should put forward his proposal as part of the council's 2013-14 annual plan process.

Let's hope he does and that a fairer system for all is the result.