Media release 30 April 2008

If Government won’t take GST off food –they could easily take GST of council rates.

Could be done by a stroke of a pen.

Government and opposition both say that removing GST from food would be too costly in terms of administration and a significant loss of revenue.

The same argument cannot be applied to effectively removing GST from council rates.

This can be done by applying a GST zero-rating to all council rates.

This would give residential ratepayers an immediate 11% reduction in rates which would equal more than $4 a week to a $2,000 annual rates bill comprising local, regional and water rates.

For superannuitants, and others on low or fixed incomes, even a $4 a week reduction would be a welcome relief.

And research carried out last year showed that revenue lost to government would be less than $200 million – peanuts for a government running a multi billion dollar surplus.

There are already a number of items which are zero-rated including internet sales overseas, financial services, exported goods and services and sales of businesses. But council rates, which the courts have declared to be a tax, still carry the additional tax of GST.

Within the next two months councils will be finalising their rate demands for the new financial year and increases ranging from 5% to 26% for some residents will be confirmed.

The 11% savings by effectively removing GST will go some way to alleviating the pain of these rates increases.

And it could be done by a stroke of Dr Cullen’s pen.

ENDS