Council puts size of potential GST windfall at nearly $40 million
FREE 3 year Get Home Safe program FREE Tool Kit and Safety Flag
FREE Cane and Cane Holder
FREE Dustcover &Rear Storage Bag High Back Swivel Seat and Adjustable Tiller
Hamilton could get nearly $40 million a year if the Government agreed to return GST on rates to councils, the city council says.
The comment - based on recent calculations - comes after a council report revealed Hamilton’s projected operating deficit for this financial year had worsened from the $36 million projected in February to $41 million.
In a statement on Wednesday, mayor Paula Southgate said she was “hugely supportive” of Local Government New Zealand’s recent call for Government to pass back GST on rates to councils.
Finance staff had estimated that GST on rates for the city amounted to $36 million in 2022-23, and $38 million in 2023-24.
Economic consultancy Informetrics had calculated that, based on the potential GST return to Hamilton for the year to June 2022, the council would have got back more than 11% of its operating income.
Also, rates are set to rise by 19.9% next financial year and 15.5% in the subsequent four years under long term plan proposals.
Southgate’s statement reiterated recent comments on councils accessing new sources of cash saying the funding model for local government is “broken and unsustainable”.
“While Government is not immune to the financial challenges we face, returning GST on rates to councils would be an absolute game-changer, allowing us to deliver essential infrastructure and services in a local way, without the burden mostly being borne by today’s ratepayer.”
Finance committee chairperson Maxine van Oosten said the council needed to explore a range of funding sources to continue supporting investments in the city.
“Relying heavily on rates is unsustainable.”
The GST idea could be one of the tools to address the funding and financing challenges faced by the council.
“Returning GST revenue to the region allows us to allocate funds where they are most needed,” van Oosten said.
At Tuesday’s finance and monitoring committee hui, councillors also suggested that having the Government pay development contributions and rates on crown land would also have a positive impact on the council’s financial position.