In March, Auckland’s mayor Wayne Brown called on the government to return GST on council rates to help fund the region’s infrastructure.
Olsen supported GST being charged on rates, as councils were providing goods and services for local residents, ratepayers, and others.
“But given constant discussion about the need to fund local government differently, perhaps GST on rates should be collected and then returned to local councils.”
He pointed out that central government finances were under pressure too, but the value of GST collected on rates was worth 0.9 percent of total government revenue in 2022.
Local Government New Zealand (LGNZ) president Sam Broughton said that despite councils’ ever-increasing responsibilities, local government’s share of overall tax revenue has remained at 2 percent of GDP for the last 50 years.
“It’s no secret that the funding system for local government is broken. Relying so heavily on rates is unsustainable,” Broughton said.
“We need a range of levers to address the funding and financing challenges in front of us. Returning GST on rates would be an excellent place to start.
“We’ve also put an accommodation levy, GST sharing on new builds, mineral royalties, and congestion charging on the table.”
RNZ