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A discussion paper prepared by the Rating Strategy Reference Group recommends the scrapping of the municipal charge and a realignment of the rate burden across residential, commercial industrial and farm properties in Greater Shepparton.

While the general principles adopted are conscious of the ‘capacity to pay’ in apportioning rates across the different property categories the outcomes vary greatly depending on the category and the property value.

The realignment is modelled on the relative rate paid – how much is paid in rates for every dollar a property is valued at.

The group recognised commercial and industrial rates were out of kilter when benchmarked against neighbouring councils and like councils across the state.

Commercial rates were applied at 292 per cent of the residential rate in 2012-13, industrial 272 per cent and farm land 100 per cent and the recommendation is they be brought down to 181 per cent, 176 per cent and 80 per cent respectively.

The devil though is in the detail and there are winners and losers across the spectrum of ratepayers as a result.

For example, farm land pays a lower percentage of the residential ‘rate in the dollar’ but that is more than offset by a 25.56 per cent rise in the residential benchmark, accordingly rates would still go up.

Rates for unimproved land would double in some cases, recognition that owners were historically charged too little and rural lifestyle property owners would pay the higher residential rate rather than the current farm rate.

The reference group, which included nine community members recommended the municipal charge, a flat $214 on every property regardless of valuation be scrapped.

The charge represented 12 per cent of Greater Shepparton City Council’s income from rates and charges in 2012-13, but particularly for lower value residential properties it represents as much as 40 per cent of their total rate bill.

Based on the same revenue target as the 2012-13 budget the modelling shows residential properties valued at $200000 or less would face increases of between 4.2 per cent and 7.5 per cent under the recommended changes if the municipal charge is retained.

Without the municipal charge those properties would pay between 4.6 per cent and 46 per cent less.

The 4324 properties valued at $150000 to $200000 would pay 4.63 per cent less without the municipal charge.

The impact of removing the municipal charge is two fold – lower value properties where the charge represents a high proportion of total rates would get a reduction and higher value properties would pay substantially more.

Higher value residential property owners would generally be better off if the flat charge was retained.

The clear winners would be commercial and industrial ratepayers who will pay less regardless of what happens with the municipal charge, although they stand to save much more if it is kept.

The discussion paper will be presented to council on Tuesday with a recommendation to release it for public comment.

For a more detailed look at the rating strategy see today’s News.