PLANS to limit councils' ability to apply differential rates may apply to farm rates, according to the Municipal Association of Victoria.
Local Government Minister Jeanette Powell has released for consultation draft Ministerial Guidelines on the use of Differential Rates.
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Mrs Powell said the Local Government Act 1989 had little guidance for councils in the use of differential rates.
"While some Councils charge no differential rates, others have at least ten different rating categories," Mrs Powell said.
Mrs Powell said the proposals focus a local government rating on the classifications of property, not the way an individual chooses to conduct business on their land.
MAV chief executive officer Rob Spence said at the guidelines looked as if they would force councils to aggregate rates in particular categories.
"Geelong for example has an automotive rate for Ford, a petroleum rate for Shell and an aluminium rate for Alcoa," Mr Spence said.
"Under the new guidelines they would all be aggregated together, so it removes councils' capacity to deal with issues of equity and efficiency."
He said the changes could mean a successful poultry farm would be rated at the same rate as a struggling dryland farm.
"We can't differentiate between the two in terms of equity and efficiency," Mr Spence said.
"It forces us to aggregate to a high level."
Member for Seymour Cindy McLeish affected farmers in the growth areas had seen their council rates quadruple in a year without any change to their business operation or improvement in local services.
Guidelines will be finalised before local governments set council budgets and rates for the 2013-14 year.
