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Total Council rates – Determined by decision, not valuations

2 July 2004

News of a 24% growth in capital valuations of property across SA from the Valuer-General has prompted a reminder from Councils that growth in property values does not result in a growth in council rates income.

Commenting on a statement by Valuer-General Neil Bray relating to valuation data recently provided to Councils and to Revenue SA, LGA President, Cr John Legoe said uneven growth would cause further tension in the rating system this year.

"It is important to recognise that Councils only use valuations after they have set their budgets and total rates income, to apportion rates to individual ratepayers," Cr Legoe said. Cr Legoe issued a graph (below right) showing how SA Councils have steadily reduced rates in the dollar to compensate for rising property values.

"People find it hard to understand how if their own rates bill rises above the average (if their individual property valuation has increased more than the Council average), that the Council's total rates income does not grow in parallel."

"But for every dollar increase in property valuation above the average there must be a dollar below the average.

"Councils reduce the rate in the dollar each year to compensate for the average increase in valuations (as shown right).

"By definition the total Council rates income only grows by the average percentage rise in rates. "What this means is that uneven valuations cause a redistribution between ratepayers, not a growth in total rates income."

Total tax rate & valuations for all SA Councils

Cr Legoe commended Valuer-General Neil Bray for providing data to Councils earlier and supporting a project run by the LGA and the Office of Local Government designed to assist Councils to best match rating options with the needs of individual communities. The project involved seminars attended by almost every Council in SA and promoted the range of ways Councils can better respond to people experiencing genuine hardship.

"The reality is that vital Council services and infrastructure must be paid for and Council costs in doing so continue to rise at greater level than the average cost increases for household goods generally described by the Consumer Price Index (CPI).

Fact sheets about how valuations are used for rates, the rating system, Council services and service enhancements can be found on www.lga.sa.gov.au/goto/rates.

ENDS

For further information contact:

Cr John Legoe, President - Mobile 0407 417 314
Mr Chris Russell, Director - Policy & Public Affairs - Mobile 0417 830 105

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