Rethinking rates

Straight from city council
A personal view,
by Councillor Steve Morris

Half serious, I once asked an MP whether local government was an invention of central government to distract and amuse the public so they could do what they liked with the big public purse!

Few would disagree that funding local government through a property tax (council rates) is a blunt instrument. It doesn't reflect how much you earn like income tax and, unlike PAYE, it gets invoiced twice a year.

Before I put my rates on direct debit, I used to dread that twice-yearly letter from council. It always seemed to arrive at the most inconvenient time financially.

Successive governments have maintained that rates aren't a tax but a payment for services so they attract 15 per cent GST, but really, it's a tax on a tax.

In the UK, councils can't increase rates more than 5.99 per cent without a binding referendum. Such an approach here would not only force financial discipline, but also require large expenditure to be communicated well and have wide public support before proceeding.

It would require a change in law though; a popular misconception is that council could have its own binding referendum, but there's no such thing. All you need is six votes around the table and a decision can be overturned.

Auckland have used a fuel tax to fund transport improvements in addition to rates. If transport was funded through such a tax instead of rates, I'm sure there would be greater support and it'd be user pays too.

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