GST increase to replace rates? Council says no

WELLINGTON Shire Council won’t support a proposal to replace council rates with an increase in the Goods and Services Tax.

Ararat Rural City Council had passed a resolution calling for the abolition of rates and supporting a rise in the GST to specifically fund local government.

The council had written to others across Victoria seeking their support.

While acknowledging a fairer way to fund local government was needed, Wellington Shire Council will not support a proposal to increase to the GST.

The peak bodies for local government, the Municipal Association of Victoria and Australian Local Government Association, have been investigating better ways.

An issue with the GST proposal was as the Australian Constitution does not recognise local government, council would need to receive the funding through the state government.

There is a campaign to conduct a referendum to have local government recognised in the constitution.

Councillor Scott Rossetti said input was needed to look at all options for funding local government.

“Rates based on the value of a property certainly does not reflect the ability to pay in ways that other taxation systems are able to pay,” he said.

“It is particularly unfair on people, like retirees, who have been living all their life in a house that just happened to have gone up in value.

“Because the value of the house has gone up, it means they pay a larger part of the council rate bill, whereas their ability to pay is reduced.

“I think often of businesses and farmers in particular, when they having a struggle with different conditions like drought and just difficult trading conditions.

“They may be sitting on a very large asset, but that doesn’t reflect their ability to pay.

“There certainly is room for us to work towards looking to finding alternative ways of funding local government that don’t rely on what is just a property tax.”

Cr Rossetti said the implications of such a major change to a tax system as increasing the GST needed to be understood.

“You might find that our ratepayers might end up paying more in GST than they’ve been paying in rates for the same level of service,” he said.

´╗┐For more read Friday’s Gippsland Times.