Ratepayers to be hurt by land tax

Press, 29 July 1989, Page 9

Ratepayers to be hurt by land tax

By

NIGEL MALTHUS

Changes to the land tax announced in Thursday’s Budget, coupled with new Government valuations soon to be announced for Christchurch City, could sting ratepayers with a tax bill amounting to millions of dollars.

Land tax is now applicable to businesses, and is levied at 2 per cent a year on land valued at $175,000 or more. From March next year, the rate will halve to 1 per cent, but local bodies will be liable for the first time, and the threshold will be down to $lO,OOO. Land used for farming, forestry, residential, charitable, and recreational purposes will still be exempt, which in the City Council’s case will leave facilities like the Art Gallery and sports grounds alone. The Civic Office building, the Town Hall, carparking buildings, works depots and the like will all be liable, however, as will the corresponding properties owned by other local bodies due to amalgamate with the city in October. The Mayor, Sir Hamish Hay, said that there were still uncertainties, but a tentative figure for the present City Council’s properties was $l.l million. Revaluations are pending, however, and there are indications of sharp rises, particularly in the central area where many of the council's more valuable properties are concentrated. The acting city manager, Mr Robert Lineham, said he expected, on provisional figures, the combined value of four key council properties to increase fivefold on their last (1984) valuations. The Town Hall was ex-

pected to go up to $l4 million, a sixfold increase on its 1984 valuation of $2.23 million. Mr Lineham emphasised that the revaluations of outlying properties would be less severe, leading to a lower average increase for all the council’s taxable land. He would not guess at the likely average, but an increase of two or three times appeared possible, leading to a total land tax liability of about $3 million. Even $l.l million represented about 2.5 per cent of the present rates take, Sir Hamish said. “So it’s not peanuts. It’s pretty tough." The managing district valuer, Mr Bryce Hadcroft, said new valuations for all properties in Christchurch City were due in September and October. New valuations for eastern suburbs from North Brighton to Opawa and southern suburbs from Hoon Hay to Taylors Mistake would be posted on September 1. Those for the northern suburbs from Papanui to Burwood and as far south as Avonside would be posted on September 29. Central, Linwood, Addington, Sydenham, Waltham, and Beckenham revaluations would be sent out on October 27, said Mr Hadcroft. Sir Hamish said land tax was yet another body blow for local government, already reeling from the elimination of

revenue-sharing announced in the previous Budget.

It would also be an added cost on struggling small businesses, who would become liable because of the lowering threshold. Sir Hamish said he could “reluctantly” live with the principle of taxing trading concerns like the airport and the M.E.D.

“But this is a very insidious action on the part of the Government, because in the past, local bodies have been regarded as ‘non-trading’ organisations, and therefore not taxable.”

After reorganisation, the disposal of surplus land would have to be considered to keep the land tax liability down, Sir Hamish said, “but that won’t happen overnight.” “I’m surprised at (Minister of Finance) Mr Caygill, after his good localbody experience in Christchurch,” Sir Hamish said. Mr Caygill was a Christchurch City councillor from 1971 to 1980. Sir Hamish said the Budget gave no indication of any plans for new funding for local bodies, and the land tax was part of a trend towards putting an imposition on ratepayers.

He welcomed, however, the Budget commitment to keeping the deficit down to reduce interest rates. If interest rates did fall, there would be benefits to the city through its loan financing, he said.