In 2016, the Victorian Government introduced rate capping to restrict the amount that councils can raise their rates each year. The Minister set the initial rate cap in 2016 at 2.5 per cent, and in 2017, the Minister reduced the rate cap to 2 per cent.
In 2018, a council's overall rate revenue must not be more than 2.25 per cent higher than last year, unless they receive an exemption.
The State's independent umpire, the Essential Services Commission, can grant councils an exemption to raise rates above the cap. In 2017, four Victorian councils were granted a rate cap variation.
The rate cap applies to the overall rate revenue collected by each council. It does not apply to each property owner's rates notice.
The rate cap applies to general rates and municipal charges. It does not apply to waste charges or the State’s fire services property levy.
Councils don't collect extra rate revenue as a result of property revaluations.
The video below details how rate capping works, however it was created in 2016 and the figures have since changed.