In the lead-up to the Council elections Jeremy Smith has been thinking about money and where the Kāpiti District council gets it from.
“The list of council hopefuls this year is sure to include a significant number campaigning under the heading: Let’s stick to the basics people- in other words the things we must have, not ‘the nice to haves’.
In other words they will be talking about the council’s main source of income- the ancient property-based tax we call rates.
Kāpiti is out of line
In Kāpiti, the rates provide about 70% of council income. That’s higher than the council average- across the country rates come in about 58% of council income.
At the same time the Labour government has set up a review of the future of local government. Look at the website for the review – council income is there all right but it’s not the first thing that sticks out.
But are rates fit for purpose to carry so much of the local government income burden. Compare them with the other two taxes most people pay.
Income tax and GST reflect your income or spending over the precise period.
Rates don’t – they reflect partly what you paid for a property at sometime in the past plus what’s been going on in your particular suburb or street – as everyone knows.
Many people have major problems with meeting their rates bill. They apply for a rates remission- money from the government.
And the fear of a rates revolt means that spending does not necessarily keep up – prime example is the state of Wellington’s water pipes. The current scrap about Three Waters is about catching up on long-deferred spending.
‘Coming to the rescue’
So the general tax payer is coming to the rescue- and not surprisingly the government, any government, wants to keep a close eye on where its money is going.
In the future – to head off another “Three-waters problem” – councils need another income source which could be GST.
In Australia, the states and territories together receive about one quarter of GST income.
One quarter of GST divied up among the 67 city and district councils would not cover all Kapiti’s capital spending.
But it would take some pressure off the rates. And redirected Government money now would head off another Government bail-out in twenty years.”