GST on rates - not the real problem

United Future is right to campaign against high rates, but misses the target by complaining about GST, says the Local Government Forum.

Forum Chairman Simon Carlaw says United Future's campaign to get rid of GST on rates would raise costs for everyone, since it would mean businesses couldn't claim the GST back and they'd seek to recover it by increasing prices.

"The real answer is to vote in councils that will be disciplined in their spending, not to fiddle with GST.

"GST is a tax on the purchase of goods and services. It's as consistent for GST to be applied to rates as it is to council fees and charges, because they're what purchase the goods and services supplied by local authorities.

"If there were no GST on rates, councils would have another advantage over businesses that have to charge GST. In many areas, including rubbish collection, councils are in competition with business - removing the requirement for them to charge GST would simply be giving them a commercial advantage, to the detriment of many small businesses.

"The root problem is high rates, caused by undisciplined councils increasing their spending year on year. Senior citizens are rightly concerned about this, along with business ratepayers who are forced to pay the lion's share of rates because of business differentials.

"The answer is in ratepayers' hands - in this year's local body elections, just vote in councillors who promise to keep rates rises down. Small spenders make hot councillors."

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