More Taxes? No Thanks

Mayor Outlines Possible New Taxes

 

I saw this morning that the Mayor is effectively looking at a Poll Tax to either replace or supplement the current rating system (property tax) Council uses to raise revenue.

From Stuff:

Brown’s bold tax plan

Making all Aucklanders pay a council income tax may help elderly people in affluent areas who can’t afford their rates, mayor Len Brown says.

The current system is “inherently unfair” on people living on fixed incomes and paying high rates because of the value of their properties in areas like Devonport-Takapuna, Brown says.

Introducing an income-related tax for local council services that everyone pays is an option, he says.

Only property owners pay rates but the council is spending money on infrastructure and services for everyone, Brown says.

He believes the only way to mitigate the rates burden as property prices rise is to rethink how local government is funded.

Brown won’t express a view on what alternative might work saying he is “quite open minded”.

Options could include funding through income tax, GST, user pays charges, or bed taxes from hotel.

—-ends—-

 

Last time a poll tax got mentioned it cost Maggie Thatcher her Prime Ministership in 1990 to John Major. While we do need to think how Local Government is funded in New Zealand such as all GST collected from rates is given straight back to the Council rather than Central Government keeping it (Australia has a GST sharing arrangement between the Federal Government and the State Governments) I believe priority one is getting our expenses in line first.

Debt moving from 175% to 275% to me is unacceptable by all means. If we need to go that high then it seems it might be time to take the ruler and red pen over expenditure. I was given an alternative to how the budget should be set for Council by an elected representative once. The idea was quite intriguing in using a big massive white board at the back of the chamber where the Councillors meet (so where the food sits) with revenue down one side and expenditure (OPEX and CAPEX) down the other. Everyone can see it, everyone can comment on it, but the sole key requirement was you did the income first then the expenditure to match the income. Not the current method of do the expenditure first then find the income to cover it. With the board present it would serve as a constant reminder if you want something can the revenue cover it – if not what needs to “go” first. Pretty much this is what households and businesses do – or rather should do (our savings and debt is nothing to crow about)

 

So I am rather cool on the Mayor’s announcement on new funding mechanisms when our current budgets are disjointed as they are.

 

Just a quick note on another Orsman piece this morning I noticed he was going on about the City debt lifting by $74 million currently. A reminder that $60 million of that is the Colin Maiden Park purchase from the University of Auckland to ensure Auckland continues to have green space as it grows. So not as alarming as it was portrayed this morning as that $60m will continue to pay dividends for generations to come.