Back to top anchor
Back to content top anchor

Transport Levy proposal could significantly impact business

News story
Monday 7 Mar 2016

Auckland Council are proposing to change the way they raise funding for the Interim Transport Levy (ITL) - introduced last year for three years to fund additional transport infrastructure.We have significant concerns about the proposed changes as it’s our view that this looks to unfairly shift the cost to business, and in some cases with significant impact, in order to reduce the impact on residential rate payers (by $24 a year).

In summary, three options are proposed for the levy:

· The levy remains at $114 for all residential property and $183 for all commercial property

· The levy reduces to $90 for all residential property and rises to $407 for all commercial property

· Changing the levy so the amount commercial property pays depends on the capital value of the property.

In most cases, these options look to bring significant impact to commercial property owners, which in turn will likely be passed onto businesses. For example,

· If Council was to proceed with the option of increasing the flat rate to $407 per annum, businesses would be paying 122% more than the current fixed charge of $183 per annum. That is a significant increase particularly for small businesses.

· If Council was to proceed with one of the options of increasing the amount collected from businesses and basing their share on capital value, we would see dramatic impacts. Nearly 50% of businesses would pay more than the current $183 flat rate, with some paying tens of thousands of dollars per year.

Whilst one of the scenarios would see lower valued commercial rated property likely benefit from a reduction in the current rate, it is our view that in principle the proposed change to the rating policy is unfair and inequitable. We will be making a submission on behalf of all business in the city centre that recommends retaining the Levy as it is for the remaining two years because:

· any change in the way the levy is funded will unfairly shift the cost to business in order to reduce the impact on residential ratepayers.

· businesses have been funding a disproportionate level of rates in the city because of the Rates Differential. Council has recognised the importance of business by slowly reducing the business differential, in its own words to"help to promote business and grow employment throughout Auckland”. So it’s our view that it does not make sense that one year into a three year rating programme, Council wants to turn around and ask businesses to pay more than their fair share.

· The justification to charge business more for transport is based on the presumption that businesses tend to generate more vehicle trips on the transport network. We don’t agree that this is a valid assumption. Goods, services and people are all putting pressure on the Auckland transport network.

· Given that Council is not looking to increase the overall amount of revenue for this Levy, there is no clear rationale to shift the goalposts by placing the ‘burden’ on business for the remaining two years, and for only a modest and short-term saving for the residential ratepayer.

· We believe this sort of action is not good for business and it’s not good for the economic success of Auckland.

We will be making a submission on behalf of all business in the city centre that seeks to retain the Levy as it is at $183 for all commercial property. Submissions close this Thursday. If you wish to see the Levy remain, we recommend selecting the option on the online form that states:

"The Interim Transport Levy should remain at $183 for businesses, and $114 for all other ratepayers”

Read more about what is proposed, find out about how the proposed changes could impact your own property and to make a submission here.

To discuss this more contact Tania Loveridge at Heart of the City by email or on 09 379 8000.