Current developments in New Zealand local government

August 2007 saw the release of 'Funding Local Government', the report of the Local Government Rates Inquiry (available at www.ratesinquiry.govt.nz). New Zealand local government has one of the world's most flexible rating (property tax) systems. Councils may choose between capital value, land value or annual (rental) value. Rates may be levied primarily as an ad valorem charge but councils may also use a variety of fixed charges. In addition they may levy a targeted rate or rates, which may be either a fixed amount or ad valorem, charged on a single property or category of properties to recover the cost of a specific service or services. Councils also have the power, in consultation with their communities, to adopt highly flexible postponement policies allowing people to defer, indefinitely, payment of rates. (Normally when this is done, councils take a first charge on the property and recover interest at their marginal cost of borrowing.