northland chamber

Submission to:
The Whangarei District Council

Submission regarding:
2007 – 2008 Draft Annual Plan
WDC Application Number
N/-
Submission by:
The Northland Chamber of Commerce
Decision sought from District Council
To Commit to reducing and eventually removing the commercial differential rating system
To budget a CBD Mainstreet Levy for the promotion and marketing of the CBD or allocate funding from the CBD ratepayers differential rates to be used for this purpose.

The Application
The Northland Chamber of Commerce currently has 340 financial members that employ the equivalent of 4000 full time employees.

Since 1903, the Northland Chamber of Commerce has served the needs of the Northland business community through its public policy and advocacy initiatives and its business development programs and services.

The Chamber also works to ensure that Northland has a business-friendly environment where all businesses can grow and prosper. With this, also comes paying close attention to the quality of life the region offers our members’ employees and families. The Chamber works to make a difference in Northland’s future and to help Northland grow.

The Northland Chamber of Commerce generally favour well researched development projects that add value to the economy, community and infrastructure of the region especially those projects that undergo rigorous scrutiny to ensure that the community and environment are protected.

From the Northland Chamber of Commerce survey with members carried out in 2006 one of the roles that our members wanted to see was an advocacy role in removing the differential rating system.

1. Rating Differential – General Rates

The Northland Chamber of Commerce agrees with the following principles in deciding on the rates take;

The Rating System should be simple and transparent

User charges should be adopted for all services where there is a private benefit and the user/beneficiary can be identified and the service quantified either directly or by proxy
A Uniform Annual General Charge should be adopted to pay for the costs of those services which benefit each ratepayer equally (such as democracy, parks and sports facilities) and to pay for those private benefits which accrue to all ratepayers equally but are not practical to collect separately
Public Benefits should be paid for by an undifferentiated rate based on Capital or Annual Value.
Targeted Rates (eg Mainstreet) may be applied to fund specific activities or where there is a need to fund specific programmes in specific areas Ability to Pay issues should be addressed, not through a distortion of the rate structure, but by transparent specific measures such are rebates, remissions and postponements.

The Northland Chamber of Commerce believes that it is It is not the job of Local Government to undertake wealth redistribution. That is the responsibility of Central Government and the same redistributive rules in New Zealand should apply uniformly through the country. The value of a property or its use is not a good indication of ability to pay.

The Northland Chamber of Commerce also strongly disputes the assertions made by some local authorities that businesses are rated more due to a greater ‘ability to pay’. The vast majorities of New Zealand businesses are very small (around 85% employ fewer than five people) and most have very low taxable incomes. Statistics from Inland Revenue indicate that 77% of companies have no assessable income at all, while another 15% earn less than the average wage. Rates differentials are therefore an onerous burden on the business sector. Unfortunately, however, it seems that businesses are an easy target from which to raise revenue, simply because there are far more residential ratepayers (i.e., voters) for councils to be concerned about.

Another argument states that businesses impose greater costs on local authority infrastructure than residential properties. This argument misses the point that the commercial sector is used by everybody – example the CBD is just as beneficial to those that go there to work, shop, eat and drink as it is to the businesses located there.

Rates differentials are also unfair on businesses competing with those operating as home-based businesses. Specific examples include that of those in the accommodation sector paying a commercial differential whilst those B&B operators paying residential differential only or an online retailer operating from a residential premises.

While local authorities should be able to tax a clearly identified set of ratepayers who largely benefit from particular public goods or services (through targeted rates), safeguards need to be in place against the abuse of powers to discriminate against classes of ratepayers.
We note that the Rating Differential on Commercial and Industrial Premises within the Whangarei District is 5 times the residential benchmark rate. This is among the highest differential rates that the Chamber has come across in New Zealand.


Wellington 4.2
Auckland City 1.6
Christchurch 2.3
Wanganui 1.7
Whangarei 5

Commercial rate differentials

In general the Northland Chamber of Commerce advocates on behalf of its members for the differential in this case to be reduced over the long term leading to the sharing and distribution of the rates burden among all Whangarei General Ratepayers. Therefore the finalized Annual Plan should set out to include policy into the LTCCP which reflects the following outcome – ‘the phasing out of the Commercial differential rating over the next x years’

We also note that in setting the differential rate the Local Authority is required to justify the differential We have not been able to locate this in the LTCCP 2006 – 2016.

The Northland Chamber of Commerce would like to make it very clear that our members find a differential system unfair, not transparent, unjustified and feel that the Whangarei District Council are taking advantage of the fact that there are less Commercial Ratepayers v Residential

We feel that a move in this direction would send a clear message that Business is welcome in the District.


2. CBD Business

In the absence of a reduction of the differential the Whangarei CBD Business Committee of the Chamber of Commerce CBD Committee have identified a need for a coordinated approach to Promotions and Marketing of the Whangarei CBD. Other areas strike a special rate or levy however we feel that reallocating a $ amount from the existing differentiated commercial rates from properties in the CBD would go some way to justifying the differentiated rate on these particular premises.


We would welcome the opportunity to be heard on this application

The Northland Chamber of Commerce is Northland’s Premier Business Advocacy, Networking, Education and Marketing Group. The chamber is part of a nationwide group of 30 Chambers of Commerce and 22000 globally.

Jeff Smith
Chief Executive Officer
Northland Chamber of Commerce
3-5 Hunt Street
Whangarei
09-4384771
info@northchamber.co.nz