- Rates (tax)
This article is about the property tax system. For the burden ratio at which a business or person is taxed, see Tax rate. For the current local government tax levied in England, Scotland, and Wales, see Council Tax.
Rates are a type of property tax system in the United Kingdom, and in places with systems deriving from the British one, the proceeds of which are used to fund local government. Some other countries have taxes with a more or less comparable role, for example France's taxe d'habitation.
Rates by country
Local government levy rates usually called council or shire rates on property based on the nominal rental value of the property. The value is called gross rental value and is calculated by the land authority or agency.
In Hong Kong, rates on property is based on the nominal rental value of the property. Unlike in England and Wales, it is still levied on domestic property as well as non-domestic premises. Prior to 2000, it was used to fund municipal services, responsible by the now-abolished Urban Council and Regional Council, through the Urban Services Department and Regional Services Department. The revenue now goes to the treasury. The bill is issued quarterly.
Israel has a similar tax known as arnona that goes back to the days of the British Mandate of Palestine. It is levied by the municipality (or, in smaller localities, by the moatza eizorit, i.e., Regional Council) based (currently) on the square meterage of dwelling or business. Specific rates vary widely among municipalities, with Jerusalem and Rehovot having the highest rates in the country. In rental dwellings, tenants (rather than owners) generally pay the arnona. Single parents and some forms of economic hardship qualify for discounts or even exemptions.
Numerous Rating Acts and their amendments have sustained Territorial Authorities of New Zealand for over a century. Rental value is not the commonest criterion: land value and improved value have been more commonly used. Many exceptions are provided in legislation to reduce perceived unfairness of whichever system the council is using.
United KingdomFurther information: Business rates in England and Wales and Business rates in Scotland
The modern system of rates had their origin in the Poor Law Act 1601, for parishes to levy rates to fund the Poor Law, although parishes often adopted property rates to fund earlier poor law measures. Indeed, the Court of Appeal in 2001 called the rating an "ancient system", suggesting that it had medieval origins. In the United Kingdom, rates on residential property were based on the nominal rental value of the property, the value being reassessed periodically in revaluations. By the Rating and Valuation Act 1925, revaluations were supposed to take place every five years but in practice they were frequently delayed or suspended. Revaluations took place in 1928/1929, 1934, 1956 (but based on 1939 values), 1963, and 1973. A revaluation due in the early 1980s was scrapped by the Secretary of State for the Environment Michael Heseltine in June 1979, with Heseltine urging householders to tear up the forms already sent out by the Valuation Office.
Whilst still levied in Northern Ireland, they were generally abolished in Scotland in 1989 and England and Wales in 1990 and replaced with the Community Charge (so called "poll tax"), a fixed tax per head that was the same for everyone. This was soon replaced with the Council Tax, a system based on the estimated market value of property assessed in bands of value, with a discount for people living alone.
As of 2007[update], domestic properties in Northern Ireland have moved to a rateable value based on the capital value of properties (similar to the Council Tax) as they stood on 1 January 2005; non-domestic properties are still rated based on their rental value. Non-domestic properties are currently being revalued, so a new list with 2008 values will come into effect in 2010.
The Crown Estate Paving Commission still levies rates on residential property within its jurisdiction, in the area of Regent's Park, London, under the provisions of the Crown Estate Paving Act 1851.
Rates on non-residential property (business rates) are still charged, at a uniform rate set by central government. Rates are collected by local councils, but the moneys collected are distributed nationally according to population.
Rating assessments (rateable values) are made on all non-domestic properties. As well as business, this includes village halls and other non-business occupations. The exception to this is where a hereditament is exempt by virtue of Schedule 6 of the Local Government Finance Act 1988 which specifies exempt classes.
The rateable value should represent the reasonable rental value of the occupation according to the circumstances at the "Material Day" and according to rental values at the "Antecedent Valuation Date". (For the compiled 2005 Rating List the "Material Day" is 1 April 2005 and the "Antecedent Valuation Date" is 1 April 2003).
Later physical changes will have a later Material Day but the Antecedent Valuation Date will still be 1 April 2003 for the currency of the 2005 Rating List. The Rating List is a public document.
Real estate taxes which are based on a percentage of the property's actual or nominal value are the prime funding method for local government.
- ^ http://www.landgate.wa.gov.au/corporate.nsf/web/Rating+and+Taxing+Valuation
- ^ http://www.cityofsydney.nsw.gov.au/council/rates/RatesInformation.asp
- ^ Alan Day, "Heseltine's hassle over the Rates", The Observer, 1 July 1979, p. 10.
- "Rate (taxes)". New International Encyclopedia. 1905.
- Chisholm, Hugh, ed (1911). "Rate". Encyclopædia Britannica (11th ed.). Cambridge University Press.
- Local taxation
- Property taxes
- Local taxation in the United Kingdom
- Taxation in Hong Kong
- Taxation in New Zealand
- Taxation in Israel
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