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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, like France's taxe d'habitation.
Local government authorities levy annual taxes, which are called council rates or shire rates. The basis on which these charges can be calculated varies from state to state, but is usually based in some way on the value of property. Even within states, individual local government authorities can often choose the specific basis of rates – for example, it may be on the rental value of houses (as in Western Australia) or on the unimproved land value (as in New South Wales). These rateable valuations are usually determined by a statutory authority, and are subject to periodic revision. [1] [2] [3]
Rates are referred to as property taxes in Canada. These taxes are collected primarily by municipal governments on residential, industrial and commercial properties and are their main source of funding.
Levied on domestic property as well as non-domestic premises. Prior to 2000, it was used to fund municipal services, the responsibility of 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.
Business rates and domestic rates existed in Ireland as part of the United Kingdom of Great Britain and Ireland and were retained after independence. Business or commercial rates are still collected. [4] Fianna Fáil promised to abolish domestic rates in its 1977 general election manifesto, won a landslide, and implemented this with effect from 1979. [5] [6] Local authorities lost 33% of their budget and made cutbacks. From the mid 1980s until 1997, most levied "water charges" to make up part of the shortfall. [6] In 2013 a Local Property Tax (LPT) was introduced, which has been compared to the reintroduction of domestic rates; one difference is that LPT is collected centrally by the Revenue Commissioners before being disbursed to the local authorities.
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 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. [7] Single parents and some forms of economic hardship qualify for discounts or even exemptions.
In New Zealand, rates have provided the major source of revenue for territorial authorities since the late-19th century. Rates are basically a tax on real property. For the year ended June 2005 [update] , rates made up 56% of local-authority operating-revenue. [8]
Almost all property owners in New Zealand pay rates; those who do so are referred to as ratepayers. People who rent property do not pay rates directly, but property owners will take account of the cost of rates when they set the rent. As a result, those who rent properties also have an interest in the level of rates, as well as in the services provided by councils using these rates.
Some types of property are exempt from rate levies - government land and rail land, for example. Other categories of property may possibly only be rated at 50% (land used for some types of sports purposes). Māori land - particularly where ownership and therefore liability for rates are hard to establish - can also get special treatment. Exceptions are listed in Schedule 1 Part 1 of the Local Government (Rating) Act 2002. [9]
Territorial authorities may assess property values in three different ways – on the basis of land, annual or capital value – using valuations prepared in accordance with the Rating Valuations Act 1998. The valuation process is overseen by the Valuer-General. Each local authority, after consulting with their community, can decide which basis to use. [10]
Councils can use a mix of these different methodologies when assessing rates based on the value of holdings, for example land value for its general rate and capital value for a targeted rate.
Councils can also levy flat charges per rating unit (i.e. each lot of land, with some exceptions where multiple adjacent lots may be considered one rating unit if in common ownership, or where multiple dwelling-units are on a single lot) - generally called a uniform annual general charge. [11] Other methodologies also exist, such as a charge per toilet bowl or urinal, or a water charge per cubic metre of water supplied.
The Local Government (Rating) Act 2002 [12] is the governing legislation and provides a number of options for setting rates, such that local authorities can use combinations of general rates, targeted rates and/or uniform annual general charges.
Rates in the United Kingdom are a tax on property used to provide some of the funding of local government.
Domestic rates, split into regional and district rates, are currently collected in Northern Ireland. They were collected in England and Wales before 1990 and in Scotland before 1989. Outside Northern Ireland Council Tax is collected instead of domestic rates.
Business rates are collected throughout the United Kingdom, with different systems in England, in Wales, in Northern Ireland and in Scotland.
In the US, real estate taxes which are based on a percentage of the property's actual or nominal value are referred to as "property taxes". The term "rates" is not used in this context. Property taxes are the prime funding method for local government (i.e., counties, cities, townships, etc.), and are normally paid by the property owner, regardless of whether the property owner lives on the property.
Council Tax is a local taxation system used in England, Scotland and Wales. It is a tax on domestic property, which was introduced in 1993 by the Local Government Finance Act 1992, replacing the short-lived Community Charge, which in turn replaced the domestic rates. Each property is assigned one of eight bands in England and Scotland, or nine bands in Wales, based on property value, and the tax is set as a fixed amount for each band. The higher the band, the higher the tax. Some property is exempt from the tax, and some people are exempt from the tax, while some get a discount.
A property tax is an ad valorem tax on the value of a property.
The Community Charge, commonly known as the poll tax, was a system of local taxation introduced by Margaret Thatcher's government whereby each taxpayer was taxed the same fixed sum, with the precise amount being set by each local authority. It replaced domestic rates in Scotland from 1989, prior to its introduction in England and Wales from 1990. The abolition of the poll tax was announced in 1991 and it was replaced in 1993 by the current system of the Council Tax.
In the United Kingdom, taxation may involve payments to at least three different levels of government: central government, devolved governments and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England, Council Tax and increasingly from fees and charges such as those for on-street parking. In the fiscal year 2023–24, total government revenue was forecast to be £1,139.1 billion, or 40.9 per cent of GDP, with income taxes and National Insurance contributions standing at around £470 billion.
An ad valorem tax is a tax whose amount is based on the value of a transaction or of a property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT). An ad valorem tax may also be imposed annually, as in the case of a real or personal property tax, or in connection with another significant event. In some countries, a stamp duty is imposed as an ad valorem tax.
Taxes in New Zealand are collected at a national level by the Inland Revenue Department (IRD) on behalf of the New Zealand Government. National taxes are levied on personal and business income, and on the supply of goods and services. Capital gains tax applies in limited situations, such as the sale of some rental properties within 10 years of purchase. Some "gains" such as profits on the sale of patent rights are deemed to be income – income tax does apply to property transactions in certain circumstances, particularly speculation. There are currently no land taxes, but local property taxes (rates) are managed and collected by local authorities. Some goods and services carry a specific tax, referred to as an excise or a duty, such as alcohol excise or gaming duty. These are collected by a range of government agencies such as the New Zealand Customs Service. There is no social security (payroll) tax.
The Valuation Office Agency is a government body in England and Wales. It is an executive agency of His Majesty's Revenue and Customs.
Business rates in England, or non-domestic rates, are a tax on the occupation of non-domestic property. Rates are a property tax with ancient roots that was formerly used to fund local services that was formalised with the Vagabonds Act 1572 and superseded by the Poor Relief Act 1601. The Local Government Finance Act 1988 introduced business rates in England and Wales from 1990, repealing its immediate predecessor, the General Rate Act 1967. The act also introduced business rates in Scotland but as an amendment to the existing system, which had evolved separately to that in the rest of Great Britain. Since the establishment in 1997 of a Welsh Assembly able to pass legislation, the English and Welsh systems have been able to diverge. In 2015, business rates for Wales were devolved.
Taxes in India are levied by the Central Government and the State Governments by virtue of powers conferred to them from the Constitution of India. Some minor taxes are also levied by the local authorities such as the Municipality.
In England and Wales the poor rate was a tax on property levied in each parish, which was used to provide poor relief. It was collected under both the Old Poor Law and the New Poor Law. It was absorbed into 'general rate' local taxation in the 1920s, and has continuity with the currently existing Council Tax.
Business rates is the commonly used name of Non-Domestic Rates in Scotland, a tax on occupation of non-domestic property. Rates are a property tax used to fund local services that dates back to the Poor Law.
The Lyons Inquiry was an independent inquiry into the form, function and funding of local government in England. Appointed jointly by the Chancellor of the Exchequer and the Deputy Prime Minister in the summer of 2004, Sir Michael Lyons produced several reports over the next 3 years, culminating in a final report on the future of local government published alongside the Chancellor's Budget in March 2007.
Water supply and sanitation services in Ireland are governed primarily by the Water Services Acts of 2007 to 2014 and regulated by the Commission for Energy Regulation. Until 2015, the relevant legislation provided for the provision of water and wastewater services by local authorities in Ireland, with domestic usage funded indirectly through central taxation, and non-domestic usage funded via local authority rates. From 2015, the legislation provided for the setup of a utility company, Irish Water, which would be responsible for providing water and wastewater services, and funded through direct billing. The transition between these models, and certain aspects of operation of the new company, caused controversy in its initial period of operation.
Most local governments in the United States impose a property tax, also known as a millage rate, as a principal source of revenue. This tax may be imposed on real estate or personal property. The tax is nearly always computed as the fair market value of the property, multiplied by an assessment ratio, multiplied by a tax rate, and is generally an obligation of the owner of the property. Values are determined by local officials, and may be disputed by property owners. For the taxing authority, one advantage of the property tax over the sales tax or income tax is that the revenue always equals the tax levy, unlike the other types of taxes. The property tax typically produces the required revenue for municipalities' tax levies. One disadvantage to the taxpayer is that the tax liability is fixed, while the taxpayer's income is not.
A property tax known as "rates" has been levied in Hong Kong since 1845. The tax applies to all domestic and commercial properties unless exempted, and is based upon the rental value of the property, re-assessed each year. Formerly part of the revenue went to the Urban Council and, from 1986, the Regional Council, but since 2000 the whole amount goes to the Hong Kong Government.
The local property tax (LPT) is annual self-assessed tax charged on the market value of all residential properties in Ireland. It came into effect on 1 July 2013 and is collected by the Revenue Commissioners. The tax is assessed on residential properties. The owner of a property is liable. The revenue raised is used to fund the provision of services by local authorities and includes transfers between local authorities.
Domestic rates are the local government taxation in Northern Ireland. Rates are a tax on property based on the capital value of the residential property on 1 January 2005. Domestic rates consist of two components, a regional rate set by the Northern Ireland Assembly and a district rate set by local councils. Rate levels are set annually. Valuation and rating of property is handled by Land and Property Services. Domestic rates are unique to Northern Ireland, in the rest of the United Kingdom the local taxation is Council Tax.
Rates are a tax on property in the United Kingdom used to fund local government. Business rates are collected throughout the United Kingdom. Domestic rates are collected in Northern Ireland and were collected in England and Wales before 1990 and in Scotland before 1989.
The Local Government (Rating) Act 2002 of New Zealand is an Act of New Zealand's Parliament that empowers Local Government bodies to levy property taxes on property owners within their jurisdictions. These property taxes are called rates. They are assessed annually and usually paid in four equal instalments.
Council Tax in Scotland is a tax on domestic property which was introduced across Scotland in 1993, along with England and Wales, following passage of the Local Government Finance Act 1992. It replaced the Community Charge. Each property is assigned one of eight bands based on property value, and the tax is set as a fixed amount for each band. Some properties are exempt from the tax, some people are exempt from the tax, while some get a discount.
