The government has decided to maintain the interest on rate arrears despite the Opposition’s suggestion to eliminate it. Local Government Minister Maciu Nalumisa explained that the interest serves as a deterrent to ratepayers who delay their payments.
Nalumisa highlighted his commitment to reforming the operations of local councils, particularly smaller ones that rely heavily on government funding for their projects. He emphasized the importance of timely payments, stating that to avoid incurring interest, ratepayers must settle their dues promptly.
The minister also noted that the Local Government Act provides provisions allowing for the waiver of interest for individuals experiencing financial difficulties, contingent upon the verification of their circumstances.
As of late August 2024, only 2,850 out of 44,749 ratepayers were reported to be genuinely facing financial challenges. Earlier this year, the Coalition Government reduced the interest rate from 11 percent to 5 percent and shifted from compound to simple interest to alleviate the burden on ratepayers. Nalumisa pointed out that compound interest exacerbates arrears because it entails charging interest on previously accrued interest, creating additional strain for those who are behind on payments.