The willingness of QLD Local Councils to indiscriminately pillage the very industries that are the lifeblood of their local economies though the discriminatory differential rating regime has achieved to new heights (or lows) in the latest round of 2012-13 Council Budget releases.

Perhaps spurred on by recent Court rulings, many Councils are now targeting ‘big business’ as the new cash cow while appeasing the residential sectors with artificially compressed rating charges. They then often champion themselves to the voting public as ‘responsible economic managers’ by maintaining the political promise of keeping residential rates near CPI.

Minimum general rates charges in excess of $1.0m are now common, regardless of land valuation. ‘Minimums’ often result in an annual tax charge many times the value of that land.

The highest differential variance we’ve noted (cents in the dollar charged against ‘targeted’ categories) is 185 times that of the standard residential charge and 50 times higher than the standard industrial charge.

Under current QLD law, Councils can take “capacity to pay” into account as a factor in structuring differential rating regimes, so long as the focus is on assumed or inferred economic capacity arising from differential land use, and not on the personal financial circumstances of individual ratepayers. A fine line.

In other States there are statutory limitations to ensure Councils do not plunder at will. In Victoria for example, Councils can levy differential rates as long as the highest rate was not more than four times the lowest, notwithstanding they use a capital ‘improved’ value base. In Queensland there are no such limitations, so for the moment it’ a case of open slather.

Imagine having your property general rates increase from $4,500 to $375,000 overnight … via a tax rate of 174 cents per dollar of land valuation!! The Qld Supreme Court has ruled it’s legal.
Tarong Energy Corporation Ltd v South Burnett Regional Council [2011] QSC 74

In that matter, Tarong was unable to convince the Court that an increase of 8,553% in the gross rates liability, was unreasonable or wrong in law.

Prior to that hearing, there was an earlier unsuccessful Appeal to gain access to information from the Council that was used to formulate the basis of the charges.

The Council had sought legal advice, and communicated the substance of that advice to an external consultant for the purposes of obtaining non-legal advice. The terms of the consultant’s engagement included an obligation to confidentiality. The consultant prepared a confidential report, including a summary of the Council’s legal advice, and presented it to a closed meeting of the Council. Tarong sought access to the consultant’s report, and the Council resisted production on the basis of client legal privilege. The Court of Appeal ruled in its favour. Tarong Energy Corporation Ltd v South Burnett Regional Council (formerly Nanango Shire Council) [2009] QCA 265

So much for openness and accountability.

One wonders how far this near limitless ability of Councils’ to pillage property taxes will extend. We forewarned of this trend in an article “ROCKETING RATES & LAND TAX” published here almost three years ago. We did not foresee however just how inequitable and unjust the pillaging would become

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