Financing Local Government

Local Government provides the services and amenities that make life tolerable and pleasant.

Roads, pavements, drainage, street lighting and cleaning, parking, sewerage, parks and gardens, playing areas, child-welfare and a wide range of public safety amenities all make land sites more desirable, and add value to property.

Who should pay for the services?
Municipal services have traditionally been financed through the rating of property. As property owners benefit especially from the availability of local services in a way not shared by others, it follows that all landowners in the area should contribute to the provision of these services.

Beneficiary Principle
The true principle of rating is that all citizens should contribute to local revenue on the basis of benefits received from local expenditure. The principle does not require a precise balancing of the increments of land value given to particular sites by particular services. All it requires is a payment into the municipal fund pro-rata to the benefit given by all services, to enable similar services to be extended to other sites or to the same site at a later period.

In recent times, “User Pays” has become the preferred method of funding public services. It is extremely popular with the more wealthy, who have already obtained the benefit of higher land values through increased public services, but prefer the costs to now be paid as a ‘user charge’, so they will pay only the same as people who have not received the same windfall gains. They do not wish to pay in proportion to the benefits they receive. For more, see: How Fair is User Pays?

Land (Site) Value Rating
The only fair method of charging people for the services they require and enjoy is Land Value Rating. LVR places the charge on the land only, not the house. Since public expenditure and services increase the land value, it is absolutely fair that we pay in proportion to the benefits received. Only Land Value Rating achieves this. Read more on Land Value Rating.