Nelson business community welcomes fall in commercial rate differential

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Commercial ratepayers in Nelson are set to receive an annual 0.5 per cent reduction in the commercial rating differential charged by Nelson City Council over the next three years.

Luz Zuniga/Stuff

Commercial ratepayers in Nelson are set to receive an annual 0.5 per cent reduction in the commercial rating differential charged by Nelson City Council over the next three years.

The proportion of council rates paid by the commercial sector is out of kilter, Nelson mayor Rachel Reese says.

“We’re working to address this by reducing the commercial differential by 0.5 per cent each year,” Reese said.

​Nelson Tasman Chamber of Commerce chief executive Ali Boswijk said any step to reduce the commercial rates had to be supported by the business community though “we’d like it a little faster”.

It was generally believed the commercial rates in Nelson were high.

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Nelson mayor Rachel Reese says commercial rates in the city are out of kilter.

Martin De Ruyter/Stuff

Nelson mayor Rachel Reese says commercial rates in the city are out of kilter.

“If you talk to just about any small business owner, they would agree with that,” Boswijk said. “They’re a lot higher here than they are in Tasman, which does seem a bit unfair.”

Raw data in the latest Ratepayers’ Report from the New Zealand Taxpayers’ Union reveals average non-residential rates, which includes commercial rates, in Nelson were $9583 in the year to June 30, compared with $4618 in Tasman District.

For residential ratepayers in the year to June 30, the position was reversed with average rates of $3228 in Tasman compared with $2971 in Nelson.

Some of that discrepancy is likely due to way the two councils set their rates – Nelson uses a land value system with differentials while Tasman uses a capital value system.

Boswijk said she was not aware of any business choosing to set up in Tasman because of lower commercial rates across the border, but high rates was a matter people would consider when they weighed up the cost of doing business.

Reese said for several decades, the Nelson City Council had maintained a commercial rating differential that was higher than the residential rates.

“This recognises the additional level of service provided to support the commercial sector,” she said. “Some examples are inner-city enhancement of public spaces, events, subsidised public parking, funding for Uniquely Nelson, and additional services such as rubbish collection and street cleaning.”

After a large residential revaluation in the 1990s, the Nelson council of the day ring-fenced a proportion of rates to come from the commercial sector.

“Over time, this has got out of kilter,” Reese said. “In my view, it is proportionately higher than it should be.”

Nelson Tasman Chamber of Commerce chief executive Ali Boswijk says commercial rates are higher in Nelson than those charged in Tasman.

BRADEN FASTIER/Stuff

Nelson Tasman Chamber of Commerce chief executive Ali Boswijk says commercial rates are higher in Nelson than those charged in Tasman.

To counter the situation, the council in 2018 started reducing the commercial differential by 0.5 per cent for the CBD, and the Stoke commercial area.

“While it has had a positive impact in reducing … CBD and Stoke commercial rates, there is now a disparity in rates paid by other commercial ratepayers,” Reese said. “For the 2021-31 Long Term Plan, it is proposed to extend the reduction in commercial differential to all commercial ratepayers in the region – 0.5 per cent reduction per year for the first three years of the Long Term Plan.”

Boswijk acknowledged that a reduction in commercial rates was likely to mean an increase in residential rates “because it [council rates revenue] has to come from somewhere”. She supported an investigation into the possibility of using a capital value system to strike the rates in Nelson.

While some people believed such a move would just “change the winners and losers”, Boswijk said it should be explored.

“Everything has got to be evaluated.”

MARTIN DE RUYTER/STUFF

Prime Minister Jacinda Ardern talks about local government reform during a visit to Nelson. Video first published on June 3, 2021.

Local government rates would “hit a ceiling at some point where people can’t afford to pay”. A central Goverment-initiated independent review of the local government sector, announced in April, could provide the opportunity to look at the issue nationally.

“How, as a country, we pay for it,” Boswijk said.

The independent panel tasked with reviewing the sector is expected to present an interim report to the Local Government Minister in September, signalling the probable direction of the review and key steps. A draft report and recommendations are due to be issued in September 2022 for public consultation.

Boswijk said the chamber “absolutely” planned to submit on the local government review.

“I don’t think people realise the impact local government has on your life.”

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