Call To Party Leaders For Abolition Of Gst On Council Rates This Year.

We are asking all party leaders to support our call for the abolition of GST on council rates as a matter of urgency.

United Future has already announced such a policy

The outrage arising from the Auckland Regional Council rates policies last year has prompted a huge public awareness of the unfairness of the rating system as a whole.

Rates are a tax on property - the values of which are set by the property market and bear no relation to services provided or used, or to the ability of the ratepayer to pay.

In essence rates are largely a tax on 'unrealised wealth'.

The application of GST to this property tax is clearly a 'tax on a tax' and, as far as I am aware, New Zealand is the only country on the world which applies a value added tax in this way.

The impact of the removal of GST would be significant to low and fixed income ratepayers.

This is particularly important in the Auckland Region this year where the recently announced Government Transport Funding package clearly signals significant increases in both regional and local rates.

Total Auckland residential rates (local and regional) amount, on average, to just over $1500, with a GST content of about $170. This represents over $3 a week to pensioners and other low income groups. That extra $3 will make a difference to a lot of people.

The cost to the Government has been estimated at about $260 million per annum - a relatively modest sum. In the current financial situation that amount could be absorbed within forecast budget surpluses. In the longer term any shortfall in Government income could - and should - be recovered through income tax (including company tax), thus spreading the impact of taxation across the whole community on a more equitable basis.

The removal of GST would be a first step in the total reform of local authority funding.

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