Regions should grab share of tax revenue

Kevin Jaffe, Simpson Grierson chairman. Photo / File

By Graham Skellern

Central and local government politicians need "take it by the teeth and get stuck in to" relieving the strain on housing and infrastructure, says Kevin Jaffe, chairman of the law firm Simpson Grierson.

He says though the economy is strong, the population growth and rise in tourism has placed pressures on infrastructure and housing.

In a survey completed by Simpson Grierson, 80 per cent of the Local Government mayors and chairs said their key issues were funding of infrastructure and housing affordability.

"There is an appetite for a more certain flow of regional funding. Rating only goes so far and local and central governments must work together to develop funding mechanisms," says Jaffe.

Take Auckland. "People have woken up to the fact that the city is straining and it needs new infrastructure. The City Rail Link project, for example, required a number (of people) to work together.

"A lot of good work was done around the Unitary Plan to enable an increase in the housing supply. That process was quick and it made a difference."

Jaffe says the key is for central and local government to keep working together to increase targeted investment into infrastructure and housing.

"It's a good thing people are moving into the regions, as we want the local economies to be strong. But investment needs to go into the regions to support their growth."

Jaffe believes the government should be open to sharing tax revenue (such as GST or regional petrol taxes) with the regions in which the revenue is collected - and those proceeds directed towards local economic development.

"Central and local government need to find alternative funding. Whether regional fuel tax is the smart way to go, I'm not sure. The figures I saw for fuel tax in Auckland wasn't a real winner. The issue is whether it will make a real difference to infrastructure or is it just another tax?"

Jaffe does not favour any further tax impost on the residential property sector. "A capital gains and/or other property taxes such as stamp duty could be the tipping point for the sector.

"The demand side has softened and that could be the result of the loan-to-value ratio restrictions.

"Maybe they have done the trick and taken the heat out of the overseas investment," says Jaffe. "Further taxes may be a step too far."

The Herald's Mood of the Boardroom 2017 Election Survey attracted participation from 118 respondents. The results were debated this morning by shadow finance spokesman Grant Robertson and National's Finance Minister Steven Joyce.