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Flat-Tax Rates Policies Hurt Low Income Ratepayers

Rates inquiry must include analysis of flat-tax policies that hurt low and fixed income ratepayers

The announcement that the Government will set up an independent inquiry into issues around local government rates funding has been welcomed by Manurewa resident and community leader Daniel Newman.

Mr. Newman, who is also Chairperson of the Manurewa Community Board, said the terms of reference for any inquiry must include an investigation of rating policies that require low and fixed income ratepayers to cross-subsidise wealthy property owners.

“Today I have written to Local Government Minister Mark Burton outlining my priorities for any inquiry into issues around local government rates funding. This includes a call for any such inquiry to investigate the use of uniform annual general charges as a flat-tax rating tool.

“This year the Manukau City Council ignored the officer’s objective evidence as well as the representations of people such as myself, and imposed a $300 uniform annual general charge, the so-called ‘Quax-tax’. Thanks to the imposition of the $300 Quax-tax, which was championed by Cr Dick Quax of Botany, thousands of low and fixed income ratepayers in the poorest suburbs of Manukau City now cross-subsidise the City’s wealthiest property owners.

“There is nothing equitable or progressive about a rating system that requires low and fixed income ratepayers to cross-subsidise wealthy property owners. Thanks to the imposition of the $300 Quax-tax, rates as a proportion of household income is now highest for ratepayers in the four wards (Manurewa, Mangere, Otara and Papatoetoe) that are home to the poorest residents.

“Any inquiry into local government rates issues must address this outrage. Low and fixed income families, people who can least afford to pay are needlessly being forced to pay an inflated rates bill. Couple that with inflated charges levied by the Council’s new water and wastewater company, Manukau Water, and it is not difficult to see why so many New Zealand Superannuitants in particular are facing severe financial hardship,” Daniel Newman said.

In writing directly to the Minister of Local Government, Mr. Newman called for any inquiry to hear evidence in communities such as Manurewa.

“There are many local ratepayers who would be only too willing to come forward and express their concern about the impact of the Council’s new rating policies. I think local people presenting evidence about the reality of Council-endorsed rating abuse would add to the credibility of any future inquiry,” Mr. Newman said.

End.

About Daniel Newman

Daniel Newman is a 29 year old resident of Wattle Downs, Manurewa. He is the chairperson of the Manurewa Community Board, serving his first term. He strongly opposed standardised rating policies which target low and fixed income ratepayers.

Copy of Daniel Newman’s letter to the Minister of Local Government follows.

Daniel Newman

24 August 2006

Hon. Mark Burton Minister of Local Government Parliament Buildings WELLINGTON

Government inquiry into local government funding issues

Dear Minister

I note the Government’s intention to establish an independent inquiry into issues around local government rates funding. I understand that the Government will develop the inquiry’s terms of reference in consultation with all parliamentary parties, and that the agreed terms of reference will be announced in due course.

I request that the terms of reference for any future inquiry into local government funding issues allow for a thorough investigation of the following matters –

the use of uniform annual general charges as a flat-tax rating tool pursuant to section 15 of the Local Government (Rating) Act 2002;

the use of a flat-charge regime by council controlled organisations such as retail water and wastewater companies; and

the possibility of extending the Rates Rebate Scheme administered by the Department of Internal Affairs to cover general charges levied by council controlled organisations.

I believe the credibility of any future inquiry would be significantly enhanced if the inquiry team travelled New Zealand to hear evidence from individual ratepayers. As Chairperson of the Manurewa Community Board I can advise that many of my constituents would be only too willing to present evidence about the impact of the Manukau City Council’s regressive new rating policies.

I welcome the opportunity to discuss any issue raised in this correspondence.

Thank you in anticipation.

Yours sincerely

Daniel Newman

ENDS

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