Capital v. Land Value
Wednesday, May 28, 2014 at 8:28AM
Bill Barclay

Predictably, the old Capital v. Land valuation argument has raised its head once again in Hamilton.

Here is the Aaron Leaman scare story that appeared in today's Waikato Times, and here is the post that I put up in 2011 on the same subject.

Nothing appears to have changed - the attitude of the Times remains the same - quote, "But such a move would unfairly hit residential rate-payers in the north." It reports 80% of the 2763 submissions on the subject were opposed to the move to Capital Value" - hardly surprising - it is the ones who stand to lose out in any move to Capital who are motivated to submit. The same thing happened here in 2008 when the same exercise was conducted through the then Finance and Revenue Committee, of which I was a member, and which incidentally had several external members.

It is of course similar to asking turkeys to vote for Christmas, but the fundamentals remain the same - it is simple question of fairness that has ben courageously dealt with by nearly every other council in the country. We remain one of the last hold-outs as the result of the concerted opposition - mainly on the Eastern Seaboard to have the value of housing taken into account when calculating rates.

The 30% increase for the northern suburbs suggested in the Leaman article repeats the same extreme exaggeration that was used by opponents to the move here - the vehemence of the opposition was almost laughable when considered alongside the actual rise and fall figures being considered at the time, and the methods that have been adopted over the years elsewhere to achieve a staged movement towards a more equitable solution.

Surely the owners of more valuable property would eventually pay more, and those at the other end of the scale less. But the argument that everyone should pay the same for the same services is pretty thin when considered alongside progressive taxation that has been the basis of our tax system for the last hundred years. And in view of the rationale behind the legislated limit of the UAGC which is a constant irritant to who would prefer a flat rate over every property.

It is entirely within the power of councils to devise differentials to protect those on fixed incomes who may be adversely effected - exactly as happens currently with rate relief for those on fixed incomes. What is ironic is that in this district where 53% of houses are owned by absentees who almost universally pay their rates where they live on a capital basis. And yet they are amongst the most vocal when it comes to objections against our conversion to capital value. It is fairly obvious that despite the horror expressed when anyone defines policies at the local government level as either National or Labour, that it is National supporters who are most vocal in their opposition to the change.

In fact, it was blindingly obvious when we dealt with the matter in 2008 that this was the case, and I suspect that the National Party regarded this as the major sleeper issue that brought it together to fight the 2010 election from behind the scenes. Leach's National support base was clearly preserved through the 2013 election to ensure that any suggestion of capital value was knocked firmly on the head before being even raised. Never under-estimate the power of the party to secure votes through its well greased and funded 'machine.' Labour was by comparison totally absent during those two elections.  

And note that there was never any suggestion of resurrecting the F & R Committee to examine sources of funding prior to finalising the current TYP. I have noted mention of same recently in Council by staff as a preliminary to the 2015/2024 Plan, but the solid base of National support around the table are hardly likely to buy into that scenario. They will I am sure keep the policy definition safely 'in-house.'

I don't expect to see any move towards capital rating prior to or during the next term of Council - it is just too fraught, and the Fairfax press, and Coro FM too committed to following the party line for any suggestion of a change to get off the ground. And yet, I suspect that Leach would secretly support such a move - just as he has indicated to me in the past his support for Area of Benefit charging of waste-water. I believe that it was only the impossibility of reverting that led him to push for the 'cop-out' of district charging of all waters.

Glenn will know full well from the statistics that he has available to him that we are one of the last hold-outs in regard to conversion to capital value, and it continues to confirm our status in the 'back-woods hick' category that he so resents.

 

 

 

Article originally appeared on BillBarcBlog (http://billbarclay.co.nz/).
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