Average Rates Increase 10 p.c.

Press, Volume CX, Issue 32351, 17 July 1970, Page 24

Average Rates Increase 10 p.c.

(N.Z. Press Association)

WELLINGTON, July 16. Most municipalities had now struck their rates for the present year, and it was apparent that on a national basis rates would increase by about 10 per cent, the president of the Municipal Association (Mr E. M. H. Kemp) said in a statement today.

The Wellington city increase of 9.97 per cent was typical of increases which had occurred up and down the country, and many were even higher than this. Mr Kemp said that the total municipal rate yield had doubled • in the last eight

years, and if the present rate of increase continued it would double again in less than that time. He said that his association was well awar* that rates alone were no longer suitable as the sole tax base for local government, and a wider base was now needed. However, any additional source of revenue for local government required Government action and in spite of all the association’s efforts over the last 15 or 16 years it had not been possible to get the Government to move in this matter.

Mr Kemp said that local authorities did not like to Increase rates, but they had no control over increases in wages and costs. To meet them they had no option but to increase rates. Unlike the central Govern-

tnent, local authorities did not have a steadily expanding tax base. The central Government taxed on income, and as wages and salaries rose so did Government

revenue. The Government also derived more and more if its income from indirect taxation. As the national income expanded, so did the Government income from this source. Indirect taxes now accounted for one-third of the Government income, and the amount of tax on the price of consumer goods was rarely realised, he said. A further burden had been added to local government revenue with the Government payroll tax. This was being levied on local government trading undertakings, and applied whether the undertaking was profitable or not. As ratepayers well

knew, some trading undertakings were not profitable, and deficits had to be met from rates. In these cases the payroll tax would also have to be met by rates.

For local government there was no alternative source of revenue, but for the central Government, the payroll tax was another source of revenue which would expand as incomes expanded and from which a steadily increasing return was assured. Although local government was by no means perfect, rates were good value for money—possibly the best ; value for money in the country. It had to be remembered that local authorities provided a wide range of services which yielded little or no direct revenue, and it provided them economically, said Mr Kemp. It had to be remembered that alterations to existing rating systems did not produce additional revenue to local authorities, he said. AU that they did was to alter the Incidence or spread of rating. To alleviate the burden on the ratepayer it was essential that local government receive revenue which would grow automatically with the increasing wealth of the community. Mr Kemp said it was a source of satisfaction to his association that at long last the Government had recognised the need for an alternative source of revenue of this nature for local government. The committee appointed by the Government to examine this and other aspects of local government finance had already presented an interim report and the Municipal Association was very hopeful that an early and favourable decision would be made by the Government to provide local government with additional revenue.