Local body tax idea 'a bit rich', says Key

Tuesday 15th April 2014 2 Comments

Prime Minister John Key made it clear he is no fan of a push by the local government lobby to be allowed to raise local taxes other than through property rates, saying the proposal is "a bit rich".

Local Government New Zealand proposed a new approach to funding local body infrastructure last week, arguing that property rates were becoming an anachronism and could put undue pressure on an ageing population who may have reduced income despite owning valuable rateable properties.

At his post-Cabinet press conference yesterday, Key said that "generally speaking, we're opposed to that."

"Our view is that it's the purview of central government to be able to raise revenue in those forms.

"My concern would be if you started seeing ad hoc bed taxes and sales taxes and all sorts of other things being applied by local government, then they would naturally add cost to the economy and make us less competitive.

"We'd need to see really good justification for why they need so much extra revenue that they can't currently raise through the rating base," Key said.

He described as "a bit rich" the argument that there would be more "asset rich, cash poor" elderly home owners with an ageing population, who might struggle to pay rates based on property values.

"There are plenty of mechanisms for dealing with that," said Key. "They can have a lien against property, they can defer taking their rates, they can have reverse mortgages. There are plenty of ways they could extract their pound of flesh but take it at a time when cashflow isn't such a problem."

(BusinessDesk)

BusinessDesk.co.nz

Comments from our readers

On 16 April 2014 at 12:45 pm Sans Serif said:

Johnnie- do not let the local bodies have power to levy taxes. They will always find empires or frills to spend money on. They do not know how to live within their means.

On 14 July 2014 at 4:09 pm Dexter McGhie said:

John Key is totally ignorant of the effect local body rating is having on rural land owners especially those in close proximity to the cities! Many landowners are paying all their land derived income in rates; farmers(make up less than 2% of the NZ population are paying 20% of the national rating, are getting less than 6% of the services and make less than the average NZ income! This is dictatorial discrimination! What are you going to do about it John?