Voters want councils to have a share of GST, poll shows

Act deputy leader Brooke van Velden has a members bill that will give councils a share of GST. Photo / Mark Mitchell

New Zealanders overwhelmingly support the idea of giving a portion of tax from new developments back to councils to help fund infrastructure.

One explanation often cited for why councils are often reluctant to build new developments is that councils are hit with the costs like building new roads and pipes, but do not reap many of the benefits in the form of higher tax receipts from increased income tax and GST take.

The Taxpayers’ Union-Curia poll asked whether people would support the idea that central government share additional revenue from new developments.

Seventy per cent agreed with the idea, while 15 per cent opposed it - the rest were unsure.

Parties have toyed with the idea of allowing councils a share of GST raised in their areas. The Act party would give councils half of the GST taxed on the construction of newbuild homes.

The Government currently taxes the sale of goods and services at 15 per cent, earning a net $26.1 billion in the last fiscal year.

Act believes its policy of returning some GST to councils would shift about $1b of this from central government coffers to local government.

The poll question was: “When people build new houses or shops, the Government in Wellington receives money from taxes like GST and income tax. At the same time, local councils must fund things like roads, parks and services that are needed for the development. Would you support or oppose at least some of the extra tax revenue from new developments staying in the communities where it is generated instead of going to central government?”

Act’s deputy leader and housing spokeswoman Brooke van Velden said she was “not surprised there is huge support for a practical sensible policy. Act has recognised for a very long time that our housing crisis is an infrastructure crisis”.

“Our councils don’t have the revenue to connect houses to infrastructure,” she said.

Van Velden has a members bill that would put this policy into practice. It was drawn and will have its first reading in the coming weeks. National and the Greens have agreed to back it at first reading, but it would need Labour votes to progress any further.

Taxpayers’ Union Campaigns Manager, Callum Purves who commissioned the poll said it was “not surprising to see local government holding up development when they are being forced to bear the costs such as upgrading water pipes or building new roads while the Government in Wellington gets all of the benefit in tax revenues”.

“Sharing some of the GST on new builds with local councils is a no-brainer. Rather than all the money going into central government coffers to be used to coerce councils into supporting reforms like Three Waters, GST sharing would direct the money exactly to where investment in new infrastructure is needed.

“This would be a positive step that would empower councils to make better decisions about local development and would ensure that they are rewarded rather than punished for consenting new homes or businesses,” he said.

The poll had a margin of error of 3.1 per cent at the 95 per cent confidence interval and polled 1000 people from March 2-7.