Govt GST-sharing proposal gets the green light from councils

27 February 2024

Councils have welcomed the Infrastructure Minister’s comments today that the Government is considering sharing GST with councils.

The comments come following extensive advocacy by Local Government New Zealand (LGNZ) to ensure councils have a range of funding levers to meet the growing needs of communities.

“Councils' share of overall tax revenue has remained at 2% of GDP for the last 50 years, despite our ever-increasing responsibilities,” says LGNZ’s President Sam Broughton. “That’s not sustainable”.

“Councils acknowledge the need for more housing in New Zealand and we play an important role in delivering the critical infrastructure that supports those new homes.

“Currently housing growth just adds cost to councils. New tools like GST sharing on new builds would incentivise councils to provide much-needed housing capacity.

“Continuing to rely so heavily on household and business rates is not a sustainable funding approach for local government. LGNZ will continue to work with the Government on a toolbox approach to addressing funding and financing challenges.

“Sharing of GST on new builds acknowledges the key role local government plays to deliver the infrastructure needed as our regions grow and will be an important piece of the funding puzzle.

“We look forward to progressing this with the Government,” Sam Broughton said.

S&P Global Ratings said last week that local government rates had not increased, as a percentage of the economy, in the past 100 years. Compare that with central government taxation which has gone up 200% in the same period.