Local government still relies on the same tax methods from a hundred years ago writes Federated Farmers senior policy advisor Nigel Billings.

Over the coming year the Government will once again be reviewing how local councils get and spend their money. Don't roll your eyes people, change might come.

It is strange but true that local government still relies on the same tax methods they had a hundred years ago. Much in the modern world is different; a council in the 21st century has to cope with an alarming amount of environmental regulation, big tourism, homelessness, and all the demands of providing the latest infrastructure.

We hear a lot about local government's problems and the familiar hand-wringing that accompanies it, yet the medieval revenue system that is property value rates remains. It's all a council has – property rates, fees and the odd pot of money proudly shipped from Wellington.


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We now have this crazy situation where the elderly, in expensive homes after a lifetime of work, pay big money in rates on property value when they have the least impact on council costs.

Farmers, miles out of town, stump up thousands for distant council services based on the value of their farm land.

This still happens, despite the extensive changes to the role of local councils in recent years. Indeed, right at this time there is legislation in Parliament extending their brief to incorporate the social, cultural and environmental wellbeing of our cities and districts. All of this with property value rates.

Rates are old school. They come out of the dominion days when drainage boards were draining the land and roads were going in. Property values were thought then to have something to do with income and benefits from local services, a connection long since lost.

So rates just get bigger, and the story doesn't change – there's no money, things are at their limit, just one more 10 per cent increase and it'll be all right next year.

Except it isn't.

As even government begins to realise modern situations require modern solutions, they've asked the Productivity Commission to check out the need to change local tax.


Let's hope they'll be bold in their recommendations.