Will our council rates increase next financial year?

While that could be possible because of inflationary pressures, an elected councillor of the Naracoorte Lucindale Council hopes the new council adheres to its core responsibilities and does not increase rates excessively.

Last year Cr Cameron Grundy called on the council to look at how it could more fairly spread the rate burden across the district.

This followed many rural people having massive rate increases of up to 20 percent or more, while selected groups of residential properties won a decrease in their rate bills.

At a recent council briefing regarding an outline of the budget and council finances, Cr Grundy believed council should stick to its core responsibilities during times of high inflation.

When contacted by The News, Cr Grundy said it was his personal opinion there was an inequity in the way the council raised taxes and called for more fairness in the process.

Cr Grundy said while he was passionate about keeping the rates at a sustainable level, it was not a sound foundation to regard rates as a wealth tax—an assumption that’s very wrong.

The council uses capital value – the value of the land and all the improvements on the land – as the basis for calculating annual rates within the council area.

The council considers that this method of valuation provides the fairest method of distributing the rate burden across all ratepayers.

This is on the basis that the equity principle of taxation requires that ratepayers of similar wealth pay similar taxes and ratepayers of greater wealth pay more tax than ratepayers of lesser wealth.

And it is assumed property value is a relatively good indicator of wealth – that capital value, which closely approximates the market value of a property, provides the best indicator of overall property value.

Cr Grundy claimed this was a flawed process.

“When it comes to houses, we have a small house and a large house, and we can understand that one occupant or one owner is wealthier than the other—I understand that,” Cr Grundy said.

“(But) firstly, that doesn’t capture the fact that the person living in the lesser-valued house may have a share portfolio that’s worth twice as much as the dwelling alongside which is termed to be a much more valuable property.

“So, it’s not really a true reflection of the wealth that each individual possesses,” he explained.

Secondly, Cr Grundy said when it came to farming properties, they were also regarded as subject to a wealth tax.

“I believe that a farm should be rated based on the fact that it’s a business first and foremost and not an asset, which should be taxed based on its value.

“If you look at this year’s commodity prices, you look at beef, which has come back arguably by 30 percent in the last six months, sheep meat has come back by 15 to 20 percent, and grains have come back remarkably.

“So, at the end of the day, a primary producer that is operating on that land has to produce a profit in order to pay the council rates.”

He claimed that the notion of a primary production property being rated based on its asset values was a “flawed concept”.

“When a primary production property or rural property is rated at many tens of thousands of dollars arguably, they should not be regarded as a confirmation of the wealth associated with that property, but more so the fact that a number of kilometres of road frontage are associated with that property, which requires maintenance that is far greater than a smaller property.”

He said as we incurred inflationary pressures in the form of expenditures, the council needed to ask what its priorities were.

“We really must ask ourselves what our own priorities are as far as expenditures go,” Cr Grundy said.

“I think there is a case in the current inflationary environment that we get back to basics and concentrate on maintaining and improving our infrastructure.

“…while some of these other programs maybe enjoyed by certain parts of the community, they are not really our core responsibility.

“I think there is a case for people who can live with sustainable rate increases, they certainly would prefer, in my experience, that the council stick with its core objectives, which are concentrating on maintenance and improvements of our infrastructure specifically.”

This article appeared in the Naracoorte Community News.