MOUNT Alexander Shire councillors have blocked commercial property rate rises in a five year strategy despite a previous review finding business contributions were "less than equitable".
Experts had suggested the council raise rates on commercial properties - which are currently 130 per cent of what an average person is charged - to 150 per cent over several years.
Cr Rosie Annear said keeping commercial rates at 130 per cent was a good outcome at a time when the business community was recovering from COVID-19 economic shocks.
"I think that it is something that a council - perhaps not this council - revisits," she said.
"I personally do not think it was an appropriate time to introduce that rise of the commercial rate."
Cr Annear did not elaborate on what conditions would allow her to consider a rise when she and fellow councillors voted through a five year rates plan last week.
Their decision came after a new report into a state government imposed rates cap found pressure was building on many councils' budgets.
The report did not name specific shires but did find that across Victoria rate capping had reduced gross domestic product by up to $890 million in 2021-22.
It could also have reduced as many as 7425 jobs, according to the Australia Institute's Centre for Jobs.
The research, which was commissioned by the Australian Services Union, found pressure will continue to build on Victoria's councils unless the government's "one size fits all" policy of tying rate rises to the consumer price index is removed.
"Far from 'protecting' ratepayers ... rate caps hurt them, in several different ways: through compromised service delivery, through lower levels of employment and/or wages amongst residents employed in the local government sector, through higher fees collected through other revenue tools (such as user fees), and through lower expenditures flowing back into the private sector," researchers said.
It found smaller and rural councils were more likely to report financial distress after almost five years of rate capping.
"In smaller towns and communities, local government is a crucial source of decent, socially valuable jobs, performed by well-qualified people, earning (and spending) decent incomes in their communities," researchers said.
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Minister for local government Shaun Leane defended the cap, which this financial year has locked rate rises to 1.5 per cent or less.
"The Fair Go Rates System helps reduce cost-of-living pressures for Victorians," he said.
"It was introduced to limit uncontrolled hikes and in 2021-22 the rate cap was the lowest it has been since it was introduced in 2016."
Before 2016, Victorian council rates were rising by as much as six per cent a year.
The mount Alexander Shire, and others in central Victoria including the City of Greater Bendigo, typically get between half and two thirds of their income from rates.
Last week, Mount Alexander Shire councillors used the vote on their future rates strategy to make a number of other changes.
They included dropping the rates farmers pay to 10 per cent of general rates.
Councillors also voted to charge more short term accommodation providers commercial rates, despite pushback from some in the community.
Current arrangements proved popular with 85 per cent of respondents in an online shire poll earlier this year, who answered yes when asked "do you think residential houses that regularly also function as tourism accommodation should pay the same as other residential houses?"
Councillors decided to bring more short term providers in line with the commercial rate to make things fairer on traditional accommodation providers like motel owners.
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