What is Rate Pegging?
Rate pegging is the percentage limit by which each Council may increase the total income it will receive from rates. The rate pegging percentage is set each year by the Minister for Local Government. The Minister may also specify the amount by which Councils may vary domestic waste management charges each year. It is Important to Note: Where the rate-pegging limit set by the Minister in any given year is eg 3.6%, this means that Council may only receive 3.6% more total income from rates than it received from the previous year. It does not mean that the rates levied on every individual property will increase by 3.
Under the Local Government Act 1993, the total amount of income that a council can raise from certain rates and charges is limited. This is called the rate peg percentage. The rate peg is determined on an annual basis. Because of rate pegging, a councils overall rates revenue cannot increase by more than the approved percentage increase. If overall land values rise, councils may have to reduce or otherwise adjust the amount of rates levied per dollar so that total income does not grow by more than the approved percentage increase.
Each year the NSW Government determines the maximum percentage by which Councils can increase their total rate revenue from the previous year. This is called Rate Pegging. It does not necessarily mean that each separate rate assessment will increase by that percentage but rather that the total rate revenue from all assessments cannot exceed this figure. Councils can however make a request to the State Government to consider granting them a Special Variation above the determined percentage. Before this can happen an extensive community consultation process must occur. This Rate Pegging limit only applies to Rates and not to Charges. The Minister for Local Government has announced for 2007/08 a 3.4% increase in General Income will be allowed to Councils. Council gained approval from the Minister for Local Government for a special variation of 4.16% to provide sufficient annual revenue to fund the ten year works program for building and community facilities.
