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Rates are a type ofproperty tax system in theUnited Kingdom, and in places with systems deriving from the British one, the proceeds of which are used to fundlocal government. Some other countries have taxes with a more or less comparable role, likeFrance'staxe 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 inWestern Australia) or on the unimproved land value (as inNew South Wales). These rateable valuations are usually determined by astatutory 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-abolishedUrban Council andRegional Council, through theUrban Services Department andRegional Services Department. The revenue now goes to theTreasury. The bill is issued quarterly.
Business rates and domestic rates existed in Ireland as part of theUnited 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 its1977 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 aLocal Property Tax (LPT) was introduced, which has been compared to the reintroduction of domestic rates; one difference is that LPT is collected centrally by theRevenue Commissioners before being disbursed to the local authorities.
Israel has a similar tax known asarnona that goes back to the days of theBritish Mandate of Palestine. It is levied by the municipality (or, in smaller localities, by theRegional Council) based (currently) on the square meterage of dwelling or business. Specific rates vary widely among municipalities, withJerusalem andRehovot 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.
InPakistan, taxes have been applicable since its independence on August 14, 1947. Previously taken from theBritish Empire. However,Taxation in Pakistan was properly introduced by the Income Tax Ordinance 1979,[8] on June 28 byCentral Board of Revenue. Tax rates in Pakistan vary depending upon the types of income, source of income, and status of taxpayers. Generally, inactive taxpayers are taxed double, while in property transactions, the latter are taxed four times more.[citation needed] In some cases, liketax on cash withdrawal, active taxpayers are not taxed. Similarly, forincome tax in Pakistan, there is a slab system for individuals and AOPs, while the corporate sector is taxed at a fixed 29% for above 250m turnover annually. Small companies are, however, taxed at 20%.[9] Individuals and AOPs are exempt from taxes if their annual income is less than PKR 600,000 per year.[citation needed] Tax rates increase for high earners. In Pakistan, the tax slab starts at 5% for income above PKR 600,000 per year and stops at 45% for income above 5.6 million per year.Government of Pakistan tax rates reach up to 50% for high-yield profits known asWindfall tax.[citation needed]
InNew Zealand, rates have provided the major source of revenue forterritorial 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.[10]
Almost all property owners in New Zealand pay rates; those who do so are referred to asratepayers. 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 theLocal Government (Rating) Act 2002.[11]
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.[12]
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.[13] Other methodologies also exist, such as a charge per toilet bowl or urinal, or a water charge per cubic metre of water supplied.
TheLocal Government (Rating) Act 2002[14]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 inNorthern Ireland. They were collected in England and Wales before 1990 and in Scotland before 1989. Outside Northern IrelandCouncil Tax is collected instead of domestic rates.
Business rates are collected throughout the United Kingdom, with different systems inEngland, inWales, inNorthern Ireland and inScotland.
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.
