Introduction. The main sources of council finance are:• rates, of which there are 2 kinds— ordinary rates— special rates• charges• fees• grants• borrowings• income from business activities• income from land• income from other investments• sales of assets.
This Chapter deals mainly with the making and collection of the different kinds of rates and the imposition of charges.
Part 1 gives a general overview of the principles of rating and explains the relationship between ordinary rates, special rates and charges.
A council must make an ordinary rate each year. The amount of the ordinary rate may differ according to the category of the land to which it applies and it may differ according to sub-categories within those categories.
A council has a discretion whether it will make a special rate. Special rates may be levied for services provided by the council (such as water supply) or for special purposes.
A council has 2 choices in determining the structure of a rate (whether an ordinary rate for a category or sub-category of land or a special rate). It may decide that the rate is to be wholly an ad valorem rate (that is, an amount in the dollar that is to be applied uniformly to the rateable value of all rateable land in its area subject to the rate). It may decide, instead, that a rate is to have a 2-part structure. The first part is to be a base amount that will be the same for each parcel of rateable land subject to the rate. This base amount will be the amount that the council determines to be the basic contribution required to cover the general operating costs of the council or to cover the cost of providing the specific service or facilities to which it relates. The second part is to be an ad valorem amount. The 2 parts are added together to produce the amount of the rate to be paid in respect of the rateable parcel.
If a council makes a rate with a 2-part structure, the application of the base amount for the rate (or the category or sub-category of the rate) must not produce more than 50% of the total revenue derived from the rate (or the category or sub-category of the rate).
Special provisions are made for the rating of vacant land.
The Chapter also enables the making and collection of charges. A charge may be made in relation to specified services provided by a council (such as the provision of water, sewerage or drainage services or the collection of garbage). A charge may be set at a level that enables part or full cost recovery or, in some cases, that exceeds costs.
A council may impose charges in addition to ordinary rates and special rates or in substitution for special rates that may be made for the same purposes as a charge.
A charge, when made, has the same characteristics as a rate concerning payment, the accrual of interest (if the charge remains unpaid) and the procedures that may be taken for its recovery.
The reasonable cost to the council of providing domestic waste management services must not be recovered by the ordinary rate. It must be obtained from the making and levying of a charge.