KEY POINTS:
Waitakere Mayor Bob Harvey is calling on councils to defy the Government and stop collecting GST on rates.
Mr Harvey told a Waitakere Grey Power meeting last night that those on fixed incomes such as pensioners would benefit.
He said the Government inquiry into rates was a "wet wash of nothing" despite his lobbying for a better system of rating, including removal of GST from rates. "A 12.5 per cent GST on rates - handed directly to Inland Revenue - is quite simply double dipping by the Government.
"Rates are a tax for goods and services delivered by local government. That's fair enough. But for the Government to charge GST on top of that is just not on."
His suggestion was applauded by the audience, including meeting convener Leo Nobilo, who said: "It should be abolished. It's a tax on a tax."
Mr Harvey said if he were re-elected for his sixth term as Waitakere Mayor he was sure his council would agree to be the first "off the block".
As chairman of the Local Government Association's metro mayors group, he knew what other mayors thought about GST on rates and would have their support.
But association president Basil Morrison said councils must operate within the law and the law required them to collect GST on rates.
He said councils collected GST but also, like any business, claimed GST back when they bought goods, such as a truck-load of tarseal.
A spokesman for Revenue Minister Peter Dunne said the consequences of not doing what the law said could be quite severe. Ratepayers whose councils did not collect GST would face "a very large bill".
But Mr Harvey said: "What is Inland Revenue going to do - bankrupt local councils? I don't think so."
