The Tasmanian Ratepayers Assoc. has written to Launceston's Mayor a Aldermen – copied below – and to date for whatever reason there has been only been one Alderman who has seen a need to responded to the correspondence ... click here to read the thread of correspondenceWED JUNE 8 2011
Mayor and Aldermen,
Launceston City Council.
The Tasmanian Ratepayers Association Inc is indebted to Leo Foley for preparing this interesting piece. Launceston City Council is NOT obliged to use the AAV system in establishing its rates. The legislation clearly allows Launceston to select another of the alternative methods. It has long been recognized at Local and State Government levels that AAV should be abandoned as it is unjust and bears an inequitable basis for rating.
The State Government PROMISED Tasmanians that this system would be abandoned by LEGISLATION but this milestone has not yet been reached and the latest promise is by about November this year. This is extremely disappointing, given the hardship created the last time Launceston was previously revalued and now to be again repeated with the new valuation notices distributed a week or so ago.
Launceston could CHOOSE to use the Land Valuation figure to levy its rate, so why not ACT NOW ??
Launceston could also CHOOSE to limit or cap its rates for residential properties, so why not ACT NOW ??
Since 2006, there have been replacement Aldermen elected to Launceston City Council, all promising REFORM ON RATING, so why hasn’t this occurred ?
In 2011, there will be another election.
PLEASE, PLEASE now consider a different rating system. Don’t repeat the old system. Capping increases at 20% IS AN EXTRAORDINARY INSULT to ratepayers, as clearly that means many many ratepayers will pay less, pay no more, or pay less than the 4% increase expected across the board.
We look forward to receiving individual responses from each and every Alderman.
Yours sincerely,
Lionel Morrell
President
Tasmanian Ratepayers Association Inc.
Tel. 6331 6144
"Absurdity of Rating Improvements (AAV) We descend from a long history of destructive property taxes!
Windows were taxed in the UK, so people boarded up their windows, making them ill!
France had its chimney tax, so people boarded them up too, smoking residents to death.
In the UK Midlands, a capital improvements tax led to the de-roofing of buildings. Absurd? Of course; but – should we laugh at our forebears? Are we any wiser?
Under Assessed Annual Value (AAV), anyone who erects a dwelling is penalized ! Then, the homeowner is penalized again whenever they improve their property. Add a room – up go the rates! Establish paths—up go the rates! Build a garage – up go the rates! AAV not only taxes chimneys and windows, it taxes the whole house!
Property value consists of two separate parts: 1. the land value itself; and 2. the value of the buildings and other improvements made by the owner. •
The AAV system fails to distinguish between the value of these separate parts. Rates are levied on the property as a whole – on land and all improvements.
Land gets its value from the efforts of the whole community, not any one individual. Under a principled system of rating, property owners would pay in proportion to the value given to their sites by the community (ie on land value), not according to the value of their own improvements.
Some of the inefficient consequences of AAV are:
Do we, as a society, need more houses?
Yes! We need to house our young families. So, don’t penalize people for building them! Infill development should not be penalized by higher rates, but encouraged by the need to derive income from sites in order to cover the rates thereon.
When ratepayers know that the council will charge them rates only on the value of their sites and not on the value of their homes or other improvements, they respond by becoming improvement-minded. The building and construction industries are stimulated, and a higher level of activity is maintained.
The Local Government Act 1993, gives the option of using one of three rating systems to Tasmanian councils: S 90 (3) A general rate is to be based on one of the following categories of values of land: (a) the land value of the land; (b) the capital value of the land; (c) the assessed annual value of the land (including improvements). In Tasmania, all municipal councils opt to levy rates on the AAV method. By comparison, all municipal councils in NSW and Queensland levy rates on the ‘Land Value’ method. Most ratepayer polls around Australia have found a majority favour the ‘Land Value’ method.
Why should ratepayers be faced with the worst system? Insist on your rates being based on land values only!
Windows were taxed in the UK, so people boarded up their windows, making them ill!
France had its chimney tax, so people boarded them up too, smoking residents to death.
In the UK Midlands, a capital improvements tax led to the de-roofing of buildings. Absurd? Of course; but – should we laugh at our forebears? Are we any wiser?
Under Assessed Annual Value (AAV), anyone who erects a dwelling is penalized ! Then, the homeowner is penalized again whenever they improve their property. Add a room – up go the rates! Establish paths—up go the rates! Build a garage – up go the rates! AAV not only taxes chimneys and windows, it taxes the whole house!
Property value consists of two separate parts: 1. the land value itself; and 2. the value of the buildings and other improvements made by the owner. •
The AAV system fails to distinguish between the value of these separate parts. Rates are levied on the property as a whole – on land and all improvements.
Land gets its value from the efforts of the whole community, not any one individual. Under a principled system of rating, property owners would pay in proportion to the value given to their sites by the community (ie on land value), not according to the value of their own improvements.
Some of the inefficient consequences of AAV are:
- AAV penalizes the industrious homeowner, thus discouraging improvements. Those who renovate find that they must pay higher rates for their efforts.
- AAV is arbitrary and unjust. The system bears little relationship to services rendered by the local authority.
- Under AAV, rates are borne disproportionately on developed properties, compared to vacant land. It costs nearly as much to maintain a road past a vacant property as it does to maintain that road past an improved one.
- AAV encourages the holding of land for speculative purposes. There is a lesser levy payable for holding land idle, than for using it.
- AAV rating is inequitable. Owners who build on their land are liable for a higher proportion of the income of the municipality than the owners of underdeveloped land, although the services offered to each by the council are identical.
- AAV has no moral basis. Not only does it fail to distinguish between land and improvements,
- AAV is a nominal figure only. It is the rent which a property might return to the owner. Since most homeowners do not rent out their house, it has no true basis.
Land differs from every other form of property. It is nature’s free gift to all of us. When a person builds a house, the house is their private property because they built it. It does not belong to the community, and the community has no right to the house or its value.
Do we, as a society, need more houses?
Yes! We need to house our young families. So, don’t penalize people for building them! Infill development should not be penalized by higher rates, but encouraged by the need to derive income from sites in order to cover the rates thereon.
When ratepayers know that the council will charge them rates only on the value of their sites and not on the value of their homes or other improvements, they respond by becoming improvement-minded. The building and construction industries are stimulated, and a higher level of activity is maintained.
The Local Government Act 1993, gives the option of using one of three rating systems to Tasmanian councils: S 90 (3) A general rate is to be based on one of the following categories of values of land: (a) the land value of the land; (b) the capital value of the land; (c) the assessed annual value of the land (including improvements). In Tasmania, all municipal councils opt to levy rates on the AAV method. By comparison, all municipal councils in NSW and Queensland levy rates on the ‘Land Value’ method. Most ratepayer polls around Australia have found a majority favour the ‘Land Value’ method.
Why should ratepayers be faced with the worst system? Insist on your rates being based on land values only!
Posted in Economics, Local government, Rates « Are higher house prices good for society? Is ‘User-Pays’ fair? »
1 comment:
What does AAV really stand for?
Absurd Average Value?
The State Government has already told Municipalities to STOP USING AAV.
But no, the Launceston Council leads the pack in doing whatever it chooses, and to hell or the poor house for its citizens.
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