Rates by instalments

Press, Volume CXI, Issue 32660, 16 July 1971, Page 8

Rates by instalments

Although many people probably welcome being invited to pay their rates by instalments, it is not surprising that the Waimairi County Council’s instalment plan has aroused some objections. The Dunedin City Corporation obtained legislative authority for such a plan in 1968 but did not put it into effect It become a lively political issue in Dunedin, the main objection to it being the one now raised by some Waimairi ratepayers: that it is unfair to persons who prefer to make a single annual payment because this has to be made “in “ advance ’’ —Le., before the due date of the first instalment In practice, most ratepayers delay payment until as long as they can legally do so without penalty—six months after the day on which rates are formally due. Technically, the instalment plan does not mean payment in advance; in practice, of course, any payment that is required nearer to the due date looks, to the ratepayer, like an advance payment

Local authorities wanting to assist themselves—and their ratepayers—by spreading the payment of rates and by providing an incentive to avoid lastminute payments do not have to rely on the legislation that Parliament passed last year. The Rating Act of 1967 enabled local authorities to levy rates by instalments; but it did not permit a local authority to add a charge (up to 10 per cent) to unpaid rates until six months after the date on which the first instalment falls due. This did not appeal to local authorities; nor did the provision that they might offer a discount (up to 5 per cent) for prompt payment—that is, within a month of the due date. The financial advantages to local authorities of collecting rates earlier must be calculable; and appropriate discounts could be assessed to encourage ratepayers to meet instalment dates.

To some local authorities, the new instalment plan is obviously tidier and more attractive. The 1970 legislation enables them to levy up to six instalments and to impose a penalty for failure to make the payments within six weeks of the due dates. The novelty of the new scheme in Waimairi, and in other areas, is bound to upset some ratepayers if only on the ground that they forgo the use of money they pay some months earlier than before. The savings that a local authority could obtain from earlier payments might mean a small reduction in the total rate levy: so perhaps the ratepayers are not worse off after all. But this depends on how each authority manages its finances throughout the year; and the savings have not been demonstrated. In any event, a change in the collection system should be for the benefit of the ratepayers, and local authorities should take the trouble to show their ratepayers where the advantage lies.