Auck. council out to reform Govt land tax

Press, 28 December 1988, Page 3

Auck. council out to reform Govt land tax

PA Auckland The Auckland City Council has commissioned a research paper on land tax and will use it to try to force the Government into tax reform.

The paper, from the Wellington consulting economists, Strategos, will, provide the council with ammunition to lobby for change against the tax it fears will be the last straw for small retailers struggling in central Auckland. Land tax bills are set to rocket with the latest Government valuation of city property. Almost half of the 500 inner-city tenants questioned in an Auckland regional Chamber of Commerce survey will consider moving their businesses to escape the tax. About 25 per cent said laying off staff might be necessary to pay the big bills expected next year.

The Chamber of Commerce, Real Estate Institute, Auckland Manufacturers’ Association, Building Owners’ and Managers’ Association and the council are joining forces

to campaign for changes to the tax.

The council’s stated aim is to “inform and influence.”

The Strategos paper will examine land tax in the same way the Treasury evaluates taxation.

"Such research has been very influential in the recent past in promoting Government policy change,” the council said. Land tax in 1988 equated to about 26 per cent of a building owner’s rates bill, the council estimates. In 1989, it will rise to 166 per cent. “What is certain, based on survey data, is that a proportion of tenants will not survive the increased occupancy cost brought about by land tax. “Those particularly affected are in the retail and entertainment sectors, in older, low rise, less-efficient buildings

where the ability to spread the land tax burden among tenants is limited. “Office tenants in recently developed high rise towers will be least affected,” the council said. Auckland’s business district land has risen in value from $4OB million in 1983 to $2,858 billion this year.

The Government, which was now taking about $8 million in tax, will get about $52 million under the new valuation. Land tax applies to any commercial or industrial property valued at $175,000 or more. The maximum rate is 2 per cent for sites valued at $350,000 and above.

The tax was introduced in the 1880 s to break up large rural land holdings.

Farm land has been exempt from land tax for 30 years.