Media release    20 Jan 2010

Statement from David Thornton

Ratepayers will get hit again if GST rises to 15%

Today’s release of the Tax Working Group report recommends that there should be no new exemptions to GST if the rate goes up to the 15% it is suggesting.

This increase will therefore affect local council rates bills.

This will mean that Council rates will need to rise by more than 2% simply to pay for this general rise in GST.

Many councils are  currently forecasting rates increase  of  5% for next year and, if the government  does raise the GST  to 15% in this year’s budget, ratepayers will be hit with a total 7% increase in their rates.

Successive governments have rejected repeated calls for GST on council rates to be exempt – or be ‘zero-rated’.

Their rationale is that GST is a simple tax and easy to understand.

Ratepayers regard GST on council rates as a ‘tax on a tax’ – and many Court rulings have held that ‘council rates are a tax’.

Home-owners on low and fixed incomes will again be the victims of a rating system which fails to acknowledge the vital factor of ‘ability to pay’.

Ends.