DCC Media Release – GST increase

Dunedin City Council
Media Release

GST’s Effects On Council Rates and Fees

As expected, the Government has raised the GST rate from 12.5% to 15% with effect from 1 October 2010. This will impact on the expenditure incurred by the Council as well as the rates and charges made to ratepayers and customers – and the Council’s projected incomes.

The Council had calculated the cost of providing its services assuming a 12.5% GST rate for all of 2010/11. To the extent that suppliers of the services that Council buys are able to increase their prices, Council’s costs will also rise. However, the extent to which that will happen is uncertain.

Rates invoiced before 1 October will carry GST at 12.5%; after that date, 15% will be paid to the Government. The extent to which ratepayers may wish to take advantage of the 12.5% and pay all of their rates before 1 October is uncertain.

It is the Council’s intention to ensure that the first instalment of rates is invoiced before 1 October for all areas of the city. The second, third and fourth instalments will, however, occur after 1 October 2010 and attract 15% GST. Whatever arrangements ratepayers may already have in place for payment by instalments, if they still wish to pay all of their rates before 1 October in order to avoid three instalments at 15%, or automatic payments or direct debit at 15%, then they are free to do so.

Fees and charges also pose uncertainties. Anything invoiced by the Council before 1 October 2010 will carry 12.5%; after that, it will be 15%. There is a second group of fees and charges which are set by the Government in statute which cannot change unless the statute changes. These include liquor licensing and parking infringement charges.

There are practical issues the Council will need to deal with in any change in fees and charges because of the GST increase. For example, under the 12.5% GST regime, of the $5 paid into a parking meter, about 55.5 cents goes to the Government as GST. Under the 15% GST regime, that figure rises to 65.2 cents. This is a loss in revenue to the Council of nearly 2%. This effect, magnified by the many millions of dollars of fees and charges on everything from library rentals, Moana Pool admission charges, parking revenues and building consents, adds up to a significant sum.

During 2010/11, the Council will monitor the extent to which the increase in GST affects its revenues and may have to consider altering its charges to recover the extra GST paid over to central government.

Contact DCC on 477 4000.

Last reviewed: 26 May 2010 3:33pm

Post by Elizabeth Kerr

4 Comments

Filed under Economics

4 responses to “DCC Media Release – GST increase

  1. Elizabeth

    ### ODT Online Fri, 28 May 2010
    GST bonus for full rates payment
    By Chris Morris
    Ratepayers who get in quick could dodge a larger-than-forecast rise in Dunedin City Council rates expected to be confirmed next week. Dunedin city councillors will gather on Monday to confirm the council’s 2010-11 annual plan, but will also consider a council staff report outlining the impact increasing GST will have on the council’s books.
    Read more

    ****

    ### ODT Online Fri, 28 May 2010
    Change likely to siphon off $750,000
    By David Loughrey
    The Government’s decision to raise GST to 15% could cost the Dunedin City Council up to $750,000 in fees and charges revenue alone, a figure that may be passed on to residents. After October 1, the Government will be taking more every time Dunedin drivers feed the city’s already unpopular parking meters, swimmers pay for entry to Moana Pool, or builders shell out for building consent fees.

    Mr Stephens stressed the cost of the Forsyth Barr Stadium would remain “neutral”, as the council could claim back any increased costs from rising GST, but cautioned against assuming the revised 9.55% rates increase forecast for 2011-12 would remain unchanged.

    Read more

  2. Calvin Oaten

    Strange! But the imminent increase in GST might just be what the council needs. It will be the excuse for all manner of twitches, all done in the name of costs due to the effects of GST. Mr Stephens has already signaled that the ‘revised 9.55% increase’ forecast for 2011-12 might be in jeopardy. As if 9.55% was joyous in the first place.
    He stressed the the cost of the Forsyth Barr Stadium would remain “neutral”. What? Does he mean neutral as in not “positive”?

    • Elizabeth

      As costs of living soar I dare say we’ll have nothing left to pay the rates with. DCC can look forward to acquiring property from the citizenry, to sell. If it helps council budgets.

      • Elizabeth

        ### ODT Online Sat, 29 May 2010
        City ratepayers receive $1.76m in rebates
        By David Loughrey
        Dunedin ratepayers were granted $1.76 million in rates rebates in the financial year to the end of April, with the vast majority of applicants successful in their applications.

        The council was trying to get across the message to ratepayers that while their income may be above the income threshold, depending on their personal circumstances, they may still be eligible for part payment of the rebate.

        Read more

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