The Taranaki Chamber of Commerce believes New Plymouth District Council has put a halt on growing New Plymouth's economy.
Earlier this month the New Plymouth District Council (NPDC) dumped a plan to change the rates differentials for businesses.
In its own research the council determined that businesses were paying 27 per cent of the rates while receiving 21 per cent of the benefits.
"When we addressed Mayor Harry Duynhoven and his councillors, their proposal was the identified rates inequity, which meant the business community was being overcharged by nearly $2.5 million a year, to be corrected over five years," says chamber chairman Grant McQuoid.
"We urged them to fix that straight away, which they had the power to do, by cutting their costs in other areas.
"We were shocked and disappointed that at the eleventh hour they decided to scrap the plan altogether."
Mr Duynhoven says the council decided to leave the differentials as they were because of the submissions from the community.
"It was overwhelmingly in support of not changing the differentials from where they were."
He points out that the Chamber of Commerce represents eight per cent of the businesses in Taranaki.
"The Chamber of Commerce were obviously unhappy because they saw it as something they could deliver for their members.
"Mind you they've only got a small number of members of the business community."
He says that changing the differentials would have, over time, had a significant affect on household rates.
Mr McQuoid believes the council's decision was wrong.
"The council has effectively said the business community matters less than residential ratepayers.
"In doing that they have completely overlooked the fact that it is the business community which provides the employment for the people.
"Their u-turn on the rates differential deprives the business community of $25m [over 10 years] and, quite frankly, we know the business community can use that money a lot better than they can."
Almost 90 per cent of businesses in Taranaki employ five or fewer people. Mr McQuoid says that over the last four years many of these businesses have had a lot of challenges to overcome.
"The outcome of this decision is that the council, with complete and full knowledge, is going to overcharge the business community $2.45 million per annum for the next 10 years.
"That's over and above what they are morally entitled to."
Mr Duynhoven says the council does not see anything wrong with the status quo.
"Each business has the opportunity, when it does its tax return, to put its expenses up against its taxable income.
"So business get the opportunity to have a tax reduction on that basis and of course most businesses are also residential taxpayers, so where they would be earning or saving a little on the business rates, they would be spending more on their residential rates."
Mr Duynhoven was proud of what the council achieved with the Long Term Community Plan.
"We brought that [rate increase] back to less than 5 per cent and I think it's time we actually got some recognition for that.
"We worked really hard and corrected a pretty awkward situation that had been building up for a long time."
He says New Plymouth still has the lowest rates in Taranaki.
"I haven't heard the Chamber of Commerce lobbying the other councils to equalise their rates. They represent all of Taranaki, not just New Plymouth."
Dalgleish Diamond Jewellers director Bill Roy was on the side of the Chamber of Commerce.
"I do not expect to be paying extra over and above everyone else to receive the same benefits."
"It is not morally or ethically correct and we as business owners wouldn't have a business if we ran this system," Mr Dalgleish says.
"The effects are felt strongly when trying to grow your people and business. It makes it especially hard when you know you are being openly short-changed as in this case."
He believes this is an issue that should be taken further by the business community.
"It is totally unacceptable to be over charged by the NPDC, them to admit to over charging by six per cent, and then refuse to refund those over charged fees to the people that have paid them."
Rivet Fabrication owner Steve Scott did not support the council's decision and supports the chamber in taking further action.
"Any direct expense price increase comes straight off your bottom line," he says. "As a business we reinvest a percentage of our profit back into the business for future growth and investment in our people and machinery to ensure we are remaining competitive. I could always spend more in this area."
He says that he can claim it back in tax. "But that doesn't mean you just let them increase to avoid paying tax."
Mr McQuoid says the chamber is now running a survey on its website to assess which action to take next. He would not rule out legal action but said cost would be an important factor.
- © Fairfax NZ News
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