Column: Rates system unfair

This week I will comment on the second phase of the rates discussion.
Once the budget has been determined, a complicated model shares the burden among the ratepayers. The generation of rates income is a combination of UAGC - a standard charge to all, the general rate - with a differential applied to allocate different proportions to different ratepayer groups, and a series of targeted rates - such as those for sewerage, water and the business targeted rate.
The model template includes 20 different business sub-sectors, 10 different residential sub-sectors, three different farming sectors and an infrastructure sector. How each sub-sector is affected by the proposed rates increase depends on the different combinations of general and targeted rates applying to that sub-sector.
Any increase is not consistent across all sectors and there are distinct peaks and troughs. In the special rates meeting two weeks ago, the council adopted model 20, resulting in an overall increase of 3.4 per cent and average sector increases of 3.2 per cent for business, 3.3 per cent for residential  and 2.5 per cent for farming.
On the surface, this looks like a reasonably fair, even spread across the three rating groups. However, actual rises across business sub-sectors range from urban central business district clubs and halls, with a reduction of 5.3 per cent, and business rural retail, increasing by 6.9 per cent.
My main concern is that 411 of the 421 central business district business ratepayers - that's nearly 98 per cent - have increases ranging from 4.9 to 6.0 per cent - well above the average.
The recent public meeting to discuss the proposed rates increases provided some horror stories of how businesses in the city centre were affected by today's economic climate. One businessman advised he had been unable to draw any wages from his store in recent times. Another said she was paying her staff more than she was able to pay herself.
With recent national and international disasters, the pressure on the retail sector will worsen. Discretionary spending will shrink, costs - particularly insurance - will rise. The allocation of rates under model 20 is unfair on businesses in the central business district and could place a number of them at risk. We already have a very high level of vacant retail and business premises in the city centre. This will not help.
On the other hand, farming, which is enjoying good Fonterra payouts and international commodity prices, has a lower than average 2.5 per cent increase.
This year's rating debate has highlighted the real need to change the rating system that generates such an unbalanced allocation of rates increases.
- Roger Gordon is chief executive of the Rotorua Chamber of Commerce