The Municipal Association of Victoria (MAV) wants large organisations to pay rates.

The Victorian government is reviewing rates rules across all 79 local governments in Victoria, looking for changes to “improve fairness and equity”.

It includes a review of the current exemption for organisations on crown land or land used for charities, religious purposes, mining or forestry.

This allows power companies, private schools, poker machine clubs and churches to be exempt from paying council rates, something the MAV wants changed.

“It is difficult, if not impossible to argue how gambling and the social cost inflicted by this activity to the most vulnerable members of the community justifies this rate exemption,” the MAV said in its submission to the review.

The group argues that many of the exemptions are for organisations that no longer just serve the local community.

“Mum and dad homeowners and small businesses are paying their council rates,” MAV president Coral Ross said.

“Exempt private and commercial activities should also be paying a fair and equitable share of rates.”

The MAV says ratepayers are “unfairly cross-subsidising” these organisations.

The organisation also took aim at private schools and universities, which it says both make large profits and charge the community to use their facilities.

Chief executive of Independent Schools Victoria, Michelle Green, disagrees.

“Schools are net contributors to society and the local communities they serve,” she said.

“There is absolutely no reason why any school — government, independent or Catholic, all of which are not-for-profit organisations — should be subject to council rates.”

MAV’s submission says small rural councils are also suffering.

“Smaller rural and regional shires don't have the population base to raise enough revenue to provide the essential services and infrastructure required by their local communities,” Cr Ross said.

“For these councils, equity cannot be achieved through the rating system.”