The Local Government (Rating) Act 2002 of New Zealand is an Act of New Zealand's Parliament that empowers Local Government bodies to levy property taxes on property owners within their jurisdictions.
Although property taxes are the least substantial of these three principal forms of taxation, they are generally held to be the most unpopular.
They are possibly the most 'obvious', they are the hardest to structure or minimize, and they apply no matter if resident is wealthy or poor.
Being sensitive to the public dislike of property taxes, and a general feeling of alienation and disenfranchisement from the tax setting and policy process, the NZ Government set about a major rewrite of both the legislation defining how local government bodies were managed (the Local Government Act 2002) and the property tax setting process (this Act).
The Act sets out parameters for how land can be differentiated, and the types of methods and formulas that can be used for assessing rates.
It also contains administrative type provisions for how values are calculated and rates are assessed and collected, penalties for late payment, and other special case considerations.
Non-rateable land is still liable to pay rates related to water supply, sewage disposal, and/or refuse collection.
But if multiple certificates of title are owned by the same person or persons, are used jointly as a single unit, and are either contiguous (i.e. next to each other) or separated only by a road or rail line or body of water, then they can be deemed a single rating unit.
A second related concept is that of determining a count of Separately Used or Inhabited Parts of a Rating Unit (SUIP).
Targeted rates can also be imposed on all ratepayers, with the monies received being earmarked to fund a specific purpose.
The Act employs confusing terminology when describing the process for setting targeted rates.
These types of waivers need to be formally reviewed at least once every six years by the local authority[4] There are also income-tested provisions under the Rates Rebate Act (1973)[5] that provides a subsidy to low income homeowners to help them meet the cost of their rates.
[8] This inquiry noted that in a number of respects, the consultation, planning and accountability practices of local authorities were more advanced than those of central government.
In 2014, the Auditor General provided some commentary on their auditing policies and issues uncovered to do with local authority rates.
[10] It is difficult to give accurate time series data for rates revenues, due to the changing nature of local authorities, one-off transactions each year, and the dominating/distortive impact of Auckland.
[11] A report commissioned by the Local Government Association shows that real rates per household have increased by almost 50% between 1993 and 2011.
[12] The Department of Internal Affairs published a detailed set of time series and analysis of how rates were imposed in July 2011.