Govt’s billion dollar tax take on rates must be returned

27 March 2024

Local Government New Zealand is again swinging behind a chorus of Mayors around New Zealand asking the Government for all GST on rates to be returned to councils. This is a funding lever LGNZ has heard and advocated for over many years.

Based on 2022-2023 rates, the Government collected $1.04 billion in GST on rates.

“Councils' share of overall tax revenue has remained at 2% of GDP for the last 50 years, despite our ever-increasing responsibilities,” LGNZ President Sam Broughton said.

“It’s no secret that the funding system for local government is broken. Rates account for more than half council funding, and relying so heavily on rates alone is unsustainable.

“We need a range of levers to address the funding and financing challenges in front of us. Alongside returning GST on rates, we’ve also put an accommodation levy, GST sharing on new builds, congestion charging and tourist levies on the table.

“With homeowners facing average rates rises of 15%, it is important that the Government gives councils more levers to sustainably fund our cities and towns. Returning the GST from rates is an excellent place to start,” Sam Broughton said.