Rates on average Auckland house will rise by $321 over the next three years if Mayor Phil Goff wins a second term.

Goff has promised to increase rates by 3.5 per cent a year during his second term, but moves to lower the rates burden on businesses means higher rates for households.

The upshot is household rates will rise by an average of 12.5 per cent for households and 7.7 per cent for businesses.

This will take the average household rates bill of $2568 to $2889 after three years, a rise of $321.

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Goff acknowledged a plan to slowly reduce higher business rates and make them equitable with household rates will impact households but said it is designed to promote business and create jobs to lift the city's economy.

"As the business rates go down gradually, the residential share goes up gradually," said Goff, who did not know the exact calculations.

Goff said the plan to gradually reduce business rates relative to household rates has been underway for several years and was due to be completed in 2036.

Council officers said the differential strategy is forecast to increase household rates by about 0.5 per cent and reduce business rates by about 1 per cent over each of the next three years. Each year about $6.45 million would be transferred from business to household rates.

Goff said the net effect would still be an overall rates increase of 3.5 per cent per year.

In his first term as Mayor, Goff held overall rates increases to 2.5 per cent. The introduction of a regional petrol tax of 11.5c a litre at the pump allowed him to drop an interim transport rate, which he replaced with targeted rates for the environment and to improve water quality.

Goff has said a 3.5 per cent rates increase is the responsible thing to do to deliver the things the city desperately needs.

"I guess we all want to go to heaven but none of us want to die. We want the services, but we would prefer not to pay any more rates," Goff has said.

Mayoral candidate John Tamihere. Photo / NZ Herald
Mayoral candidate John Tamihere. Photo / NZ Herald

Goff's main rival John Tamihere has promised to freeze rates for three years, saying it would cost $86.6m a year - a 1 per cent saving across council and council-controlled organisations (CCOs).

He said long-suffering ratepayers needed respite from the 'tax and spend' mentality of Goff, who he accused of introducing "four new taxes by stealth" - the regional petrol tax, bed tax and targeted rates for the environment and water.

Goff said Tamihere's plan to freeze rates would not work because the council could not borrow against the money saved - only against revenue.