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Councils want “tax on a tax” rebate

Wairarapa’s Mayors say a GST rebate would ease the long-term rates burden on residents and local businesses. PHOTO/KAREN COLTMAN

MARCUS ANSELM

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Wairarapa councils could receive a cash boost if a move to rebate goods and services tax [GST] on rates comes to fruition.

Local councillors and officials meet in Wellington next month to discuss a range of issues, and the rebate on the “tax on a tax” is live once again.

Should a vote pass, Local Government New Zealand [LGNZ] will lobby central government to return back to councils the GST paid on rates.

Councils believe the money should not go back into ratepayers’ pockets directly.

Instead, the intent is to lower the long-term rates burden.

Larger councils could see tens of millions of dollars come from the initiative.

Figures such as an $80 million windfall for big city councils, as part of $800m nationwide.

Wairarapa’s authorities would not see quite the same income, but it could see seven-figure numbers on the balance sheet.

Masterton Mayor Lyn Patterson said local government had been campaigning for many years to central government on the matter, as it is considered “a tax on tax”.

“There’s been remits before that have gone through LGNZ, so I don’t think you’d find a council that wouldn’t support it.”

Nationwide concerns on creaking infrastructure meant it was past time for further money to be spent, and this was an ideal vehicle to raise those funds, she said.

“We have an infrastructure deficit right through New Zealand.

“The sector believes this is a good way for central government to generate funds for councils to deal with that deficit.”

She said it was important to remember that councils “could never catch up with infrastructure”.

“You look at the kilometres of reticulated networks we have in every town and city in New Zealand, you can’t physically do it all at once because you don’t have the contractor capacity.

“You do it over a period of time, with a 30-year infrastructure strategy.

“But by the time you get to the last lot, you’re ready to start again, renewing.

“That’s why we have the deficits in infrastructure across New Zealand, because they were done, but they weren’t maintained.”

Carterton counterpart Greg Lang said his authority would vote in support of the proposal.

“It seems ridiculous that GST is paid on rates – and especially at this time when our infrastructure services costs are so significant.

“For Carterton, we estimate the GST is in the order of $2m per year – which for our small rating base is a significant amount.”

Alex Beijen, South Wairarapa’s Mayor, also supported the measure.

Beijen said the concept of GST on charges such as petrol taxes, road user charges, and rates “are illogical at a fundamental level”.

“The disconnect between central and local government, and who provides services and infrastructure has been widening since the 1970s.

“Central Government creates legislation that local government must administer, but without funding from taxes.

“Every additional function of central government creates leads to an increase in rates.”

He said the move would give councils a 15 per cent increase in revenue “without impacting ratepayers”.

“This will go part of the way to redressing the inequities where central government taxes the public via the rating system.”

Mayors, elected officials, and council staffers meet for their summit at the Te Papa museum on August 21.

-NZLDR

Emily Ireland
Emily Ireland
Emily Ireland is Wairarapa’s Local Democracy Reporter, a Public Interest Journalism role funded through NZ On Air. Emily has worked at the Wairarapa Times-Age for seven years and has a keen interest in council decision-making and transparency.

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