GST Off Rates Not The Answer, Says Shirley

Monday 2 Aug 2004
Ken Shirley
Press Releases -- Taxation

ACT New Zealand Local Government Spokesman Ken Shirley today urged United Future's Gordon Copeland to dump his Private Members Bill proposing the exclusion of GST on rates.

"This is a hoary old chestnut that successive governments have rejected for good reasons - and it does United Future little credit to dredge it up once more," Mr Shirley said.

"GST is a tax on the price of goods and services that councils supply, rather than a `tax on a tax' as Mr Copeland claims. If local authorities were to be exempt from GST or zero-rated, they would be tax preferred relative to private businesses.

"If GST were only to be applied to goods and services supplied by council trading activities, rather than public good activities, then there would be complex boundary problems undermining the integrity of our GST system.

"United Future claim that its proposal would help businesses, but nothing could be further from the truth. GST is a tax on final consumption, and it is the consumers who would derive any benefit if rates were zero-rated or exempted. All that businesses would incur is the writing of larger GST cheques to Inland Revenue.

"If United Future is concerned with the burden of rates then I share that concern. Rates have been escalating well above levels of inflation for many years. This problem should be addressed directly by curbing excessive activities and expenditure of local authorities, along with the removal of waste. The tinkering with GST is not the answer," Mr Shirley said.

ENDS

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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