Straight from city council with councillor Steve Morris

Last week I shared with you the story of a senior couple living off national superannuation struggling to pay rates that are rising faster than inflation. I expressed my frustration that some well-to-do members of our community call for greater rate increases, hurting those on low fixed-incomes.

One problem with our rating system in Tauranga is that it's a “regressive” tax. You'll be familiar with a “progressive” tax, that's the system the Government uses for collecting income tax. For example, the more you earn the higher your tax is as a percentage of income.

It's the opposite with TCC rates; the lower your property value, the more you pay as a percentage of your house value.

This is because of something you may not have noticed on your rates bill called the UAGC – the Uniform Annual General Charge – which is currently $810 per property regardless of its value. In my view, the reason for charging a high UAGC isn't based on facts, but rather an urban myth. The myth is that poor ‘Mr and Mrs Smith' have lived in a house for 30 years, which has risen steadily in value to be worth $4m. If they paid a flat rate – like Hamilton City Council charges –they'd be “rated out of their home!”

So the answer is to shift more of the total rates' take onto lower value property owners through a UAGC. Is that fair? Reducing the UAGC by two-thirds would result in more than 70 per cent of our ratepayers paying less. Where does this leave Mr and Mrs Smith? I'll tell you next week and the answer may surprise you.