Environment Waikato councillors today debated the merits of continuing with a rates money-go-round to fund early payment discounts
In the current year more than a million dollars was added to the overall rates bill so that it could be given back to people who paid their rates in full by the due date.
All ratepayers pay the extra rates to fund the discount. Figures presented to the council today showed the example of a ratepayer with an annual rates bill of $407. The ratepayer paid an extra $6.27 in rates and received a discount of $10.18, a gain of $3.91.
Meanwhile, another ratepayer pays the same amount - including the extra $6.27 in rates - but gets nothing back because they pay after the due date or have opted to pay by regular direct debit. These ratepayers are subsidising other people’s discounts.
Chairman Peter Buckley said that after considering all the issues the council considered it simply fairer and more transparent to do away with the discount.
During deliberations on submissions to its 2010/11 Draft Annual Plan, the regional council heard that 312 people submitted on a proposal to remove the 2.5 per cent early payment discount.
Thirty per cent of submitters supported the removal of the discount, 68 per cent opposed. The numbers who did not want to remove the discount roughly mirrored the 72 per cent of people who benefited from the discount.
The 28 per cent of ratepayers who did not take up the discount or paid by direct debit instalments paid an extra $286,000 in rates to subsidise those who qualified for the discount by paying early.
However, councillors agreed to move the payment due date from 20 September to 30 October, giving ratepayers an extra six weeks to pay their rates or go on a payment plan.
The penalty for late payment will increase to 10 per cent, with a penalty applied in July for the previous year’s rates and in November for the current year unpaid rates. Ratepayers on a payment plan will not incur penalties.
By removing the early payment discount, the council is able to reduce the overall rates requirement this year by more than $1 million, or 1.54 per cent.
Deliberations continue until tomorrow at which time decisions will be confirmed. The council will adopt the Annual Plan in June.