Report proposes new local taxes

SLIM PICKINGS: The super-city concept won't solve funding shortfalls for councils.

Wairarapa councils unanimously support a review of council funding - but say it won't come without issues.

A new report has proposed various new taxes at local level to underwrite councils which are struggling financially.

Local Government New Zealand (LGNZ) released the funding review discussion paper on Monday with options for addressing current and likely future funding shortfalls at local territorial authorities.

The report was the first in a two-stage funding review and considered alternative ways to deal with the increasing demand on services and infrastructure.

Suggested options included adding a local income tax, local expenditure tax, selective taxes, regional fuel taxes or transaction taxes.

LGNZ said councils spent about 10.5 per cent of all public expenditure, but raised only 8.3 per cent of all public revenue.

LGNZ also proposed a "principles-based partnership model" with central government.

This would include central government considering the costs and benefits of decisions for local communities and co-funding costs where policy proposals were of significant national and local benefit.

South Wairarapa District Council chief executive Paul Crimp said the review was a really good first step towards getting additional support for local bodies.

"At the moment, there's a deliberate disconnect between local and central government," he said. "Government policy-makers don't get the same feedback on the way policies affect locals that we do.

"Getting us closer would give them a better understanding of their impact on local government so it can only help."

Selective taxes would usefully target particular groups - though system flaws were imminent, he said.

"The current rates system is pretty general so I think opening it up to include selective taxes would be a good thing. "

Mr Crimp believed a super-council wouldn't solve funding shortfalls.

"The ratepayer base wouldn't change so the same funds would be collected. The only way it would benefit funding was if there was a massive saving in costs and that's not predicted."

Carterton District Council chief executive Colin Wright said the council welcomed any discussion around funding.

"I think the existing system of property rates is a pretty narrow form of funding," he said. "Other rates are worth considering but, like anything, the pluses and minuses would have to be weighed up."

Masterton District Council spokesman Sam Rossiter-Stead said it was evident councils required a larger range of funding tools as current legislation was quite restrictive on what they could and couldn't do.

"Having said that, there are obviously a number of practical difficulties to overcome, as highlighted in this funding review," he said.

LGNZ president Lawrence Yule said funding shortfalls meant more and more councils faced financial challenges when demand for infrastructure and services was greater than ever. NZME.