The Victorian Farmers Federation has called on the state government to intervene to stop Glenelg Shire council from introducing rate hikes of more than 200 per cent for some primary producers.
VFF president Emma Germano has written to Local Government Minister Shaun Leane, expressing concerns over a change to the rating system by the shire.
The shire has had a 30 per cent rate rebate in place for farmers since 2010/11 but is proposing to replace it with a differential system, used by many other shires.
"The proposal was based on council assuming gross, rather than net, rate payments from farmers," Ms Germano said.
"Therefore it was wrongly assumed farmers contributed $11,431,588 to the budget, when in reality farmers only contribute $8,002,112 due to the application of the primary producer rebate."
Differential rating allows councils to discount the rate paid by each land use sector, meaning some land owners will pay more than the 100pc general rate, while others will pay less.
Ms Germano said under the draft budget, the shire's total rate revenue would increase from $25.1 million to $28.8m.
"The average rates for a farm assessment will increase from $2877 to $3538 - representing a 23 pc increase, while the average general rate will increase from $1811 to $2065 (or) a 19pc increase," she said.
"At a time where cost of living pressures are placing an enormous burden on the whole community, it is ludicrous to think a council would increase rates by such an amount for every ratepayer."
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The VFF questioned whether the shire was operating within the bounds of the government's Fair Go Rate policy, which limits the average increase council can collect from rates to 1.75pc.
In its draft budget, council is seeking to reduce the general rate for farmland by nearly 38pc, to 0.002610 cents in the dollar.
But that has been offset by the jump in the value of farmland by more than $1 million, or 37 per cent, from $2,729,384 to $3,749,790.
In its draft budget, the council said it expected primary producers would contribute nearly 23 per or $9,785,000, of the shire's rate burden.
Livestock producer Kevin Stark, Blink Bonnie, Lake Mundi, said he expected his rates to rise by 23pc.
"The highest I have heard, in other areas of the Glenelg Shire, is 220pc and plenty of people north of Casterton have a 60-70pc rise," Mr Stark said.
Glenelg was making a "money grab" for $3.5m from all ratepayers.
"They are going to pick up that $3.5m they claim they collected and paid back to us as a rebate," he said.
He said an example of the rebate was that if $30 was taken off for every $100 paid in rates, the actual payment would be $70.
"It's not a figure the council ever collected, it's a book entry," he said.
"Look at the diesel rebate - we pay full tote odds for the diesel when we purchase it, then we apply to the government to collect our rebate and they pay us that money.
'Well, the shire never paid us any money."
He said his rate bill would go up by $12,500.
"We want them to throw out the draft budget, bring in a new one, with a genuine 1.75pc rate increase," he said.
Mr Stark and lamb and beef producer Andrew McEachern, Strathdownie, are both part of the Fair Go for Glenelg Shire Rates Payers group.
Mr McEachern said he expected his rates to go up by $18,000-20,000, on his current bill of $40,000.
"There are already individual businesses that already pay tens of thousands of dollars for little service, for that money, who are now being asked to pay tens of thousands of dollars more,"Mr McEachern said.
"They way they have tried to introduce it is deceitful and underhand."
In his submission to the council, he said in many cases rates would be the equivalent of a year's fertiliser bill, the finance costs of an overdraft, a full-time employee or a major factor in being able to pay off debt.
"For many landholders, council rates will soon become their single biggest annual cost," he said.
"The draft revenue and rating plan is a shameful cash grab - under this proposal, around 500 landholders will contribute $10m annually, or pay around half the $20 million rates pool gather by the shire."
Glenelg Shire Corporate Services director David Hol said council had proposed transitioning from a rebate to a differential rate after 18 months of consultation.
He said it was clear the rebate had been applied to farm rates, every year, over the past decade.
"The allegation that it is an accounting practice or that the 30pc rebate was not applied is totally inaccurate."
In its draft budget, the council proposed replacing the rebate with a differential of 70pc, which would be one of the lowest offered by similar councils in the region.
In its Draft Differential Rating Discussion Paper the council said the rebate scheme had increased in value from just over $1m in 2010/11 to nearly $3.5m in 2021/22.
"Council is unable to sustain such a model going forward," the paper said.
Officers told the council the transition from the current structure to a differential model was a significant change.
"Due to the nature of a differential scheme distribution, these changes will impact all ratepayers within the municipality, not just those receiving the rebate," they said.
"The financial position of council is such that it cannot continue to provide an escalating discount rebate scheme within a state government rate capping environment and that the circumstances are now timely to review the rating structure," the council was told.
The council will bring down its budget on June 28.
The state government has been contacted for comment.