KEY POINTS:
One per cent of GST should be handed back to Auckland to take the pressure off property rates and provide $200 million a year to develop the region, says Auckland City mayoral candidate Alex Swney.
A Government inquiry was right to say rates would be unsustainable for a significant number of ratepayers in 10 years but failed to look hard enough at alternative funding sources, he said.
"Councils need a more sustainable source of revenue that grows as the economy grows. I am calling for the repatriation of a small proportion of GST to become part of a national discussion alongside side the Shand report."
Rodney mayoral candidate and local government analyst Larry Mitchell supported the concept of a share of GST being returned to councils so long as it was spent on projects that advanced the "New Zealand Inc economy".
The inquiry, headed by public finance expert David Shand, has made 96 recommendations, including taking $100 million a year from GST to set up a contestable fund to pay for water.
This was the only recommendation touching on GST. Politicians, including United Future leader Peter Dunne, have been pushing for years to remove GST on rates, saying it is a "tax on a tax".
As Heart of the City chief executive, Mr Swney has been urging the Government to give councils a hand-up by sharing its $50 billion tax take with councils.
He said 11.5 per cent of GST should go to central government and 1 per cent go to local councils.
That would generate $680 million a year for councils throughout New Zealand and $200 million for Auckland councils.
"More than 100 cities in the United States are building rail systems because they have a share of sales tax revenues. Across the Tasman, the GST generated in New South Wales returns to New South Wales," he said.
The inquiry, set up by the Government a year ago after protests against sky-rocketing rates bill, found councils were taking more money from ratepayers than they needed to.
It criticised councils for not exercising enough spending restraint and said they should defer projects, borrow more and set higher user charges.
The report received the thumbs up from local body leaders, including Auckland City Mayor Dick Hubbard and Auckland Regional Council chairman Mike Lee.
But another Auckland City mayoral candidate, Steve Crow, said the report was short on recommendations to cut wastage and prevent ratepayers' money being poured into grandiose projects.
Water Pressure Group spokeswoman Penny Bright was aghast at the recommendation for more user-pays for water and wastewater, saying it would place a disproportionate burden on poor families and not encourage water conservation.
