Thursday, August 03, 2006

Rates and the elderly

It has been quite interesting to see over the past week the reactions to the new Auckland city rates bills. 

The NZ Herald managed to elict this nugget from Auckland City chief executive David Rankin:
"People did not realise the wide range of services provided by rates, such as world-class water and treatment of sewage or that most spending on roads and public transport came from rates."

But the more insightful quotes were actually:
People wanted more and better public facilities and there was no "painless" way of paying for it.
He [Mr McKinlay] said people moaned about rates bills but did not get nearly as excited about power bills, which were often higher.

I personally don't mind this set of rates increases - because I happened to provide feedback to the Auckland city plan and the eventual decision on what they were planning to increase funding on has a reasonable congruence with what I was willing to spend additional money on.  But what is interesting in the current set of public opinions is the number of people that have supported collectivist and redistribution policies, now complaining about the effects of those policies. 

Because rates are just a form of taxation, which happens to attempt to levy itself on a proxy of wealth (much like income taxes).  Both are made unfair in their application through their supposed attempt to be equitable.  The most amusing thing in reading the opinions in the blogosphere and Herald is that in the main the right wing sphere has actually been derisive towards those complaining about the bills saying they should just sell their appreciated assets and it is just free markets in action (when taxes and levies are normally quoted as market failures...), while those on the left wing have in the main been the complainers about the size of the funding required for their public transport / community initiatives etc for which they were the main protagonists. 

We then of course have the Libertarian sphere combining with the less politically partisan (a strange sight) to decry the whole concept of rates in general.  Although in the last case the Libertarians are normally calling for better user pays allocation while the non-politically partisan seem to be calling for central Government funding, where the latter of these is just an obfuscation of the problem, and just lumps more into a different inequitable funding mechanism.

David Rankin's quote caught my eye in particular with regards to this because he is of course right - alot of the issue in rates is that people cannot tell what they are paying for.  What is less clear is two things:
Why he doesn't see that this is implicitly solved by moving to actual user pays?
Why he chose the two examples that do have specific taxes and charges outside of the rates system?
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