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Capital v. Land Valuation 

Amongst all the claims made by our new Mayor and Council concerning savings and efficiencies, one aspect of our Ten Year Plan that has slipped under the radar relates to the Capital v. Land valuation system. The previous council attempted to deal with the matter at its last Review, but ran into an outpouring of passion from those who view the movement to Capital Value as the work of the Devil, despite the fact that most councils, including every major city, have now adopted the system.

Hamilton City has now proposed to move in this direction over five years, and put its proposal out to public consultation last week. As has happened elsewhere, it justifies the move on the grounds that capital value is “widely considered to be fairer and simpler, and would eliminate many existing rate distortions”. It also reflects the Shand Report recommendations.

The relative average value of property in this district heavily favours the Eastern Seaboard, and it is only natural that ratepayers thus affected by any change – no matter how small, will strongly object. Of course, owners of higher value homes tend to be more vocal in protection of their interests, and undoubtedly, residents of River Road, and similar will be equally vocal during the forthcoming Hamilton hearings.

The widespread mis-information campaign mounted by opponents the last time the proposal was on the table will undoubtedly be resurrected should our Councillors have the courage to again move in this direction. I have no confidence that this will be the case – most have shown a very limited understanding of the issues to date, and a tendency to avoid anything controversial involving finance.

I don't intend to go into all the arguments for and against - they have been thoroughly explored elsewhere, and most readers of this post will be well aware of them. The bottom line is that attitudes towards the change are generally governed by self interest, but in saying that, I was most surprised at the support for the change that came out during the last hearings from many who would have been likely to be  adversely affected. They were simply out-gunned by raucous opposition from others who used a barrage of mainly philosophical arguments based on 'equal rates for equal services'. The balance on Council swung away from change in the face of this opposition.

It is interesting to note that Hamilton City proposes to eliminate four out of seven differentials in its rating system, and at the same time introduce a 76% differential for Central City business to give a boost to that area, currently suffering badly from a recent substantial shift of business from Central to the Tainui owned Te Rapa Base.




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