(1)  If any rates or instalments are not paid on or before the date they fall due, a council may –

(a) impose a penalty not exceeding 10% of the unpaid rate or instalment; or

(b) charge a daily interest not exceeding the prescribed percentage in respect of the unpaid rate or instalment for the period during which it is unpaid; or

(c) impose a penalty and charge interest as specified in paragraphs (a) and (b) .

(2)  For the purposes of subsection (1) , prescribed percentage is to be calculated in accordance with the following formula:

where –

P is the prescribed percentage;

LTB is the official ten-year long term bond rate as determined by the Reserve Bank as at the close of business on the last day of business preceding 1 March.