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Sneaky $70 back-door tax on home owners
City of Sydney, 28 October 2008

The City of Sydney is calling on the State Government to come clean on plans to slug NSW home owners and businesses with a new $187million tax.

Under the plan, local councils would be charged payroll tax for the first time and forced to collect additional fire levies, normally paid by insurance companies. The plan is part of a review of state taxation by the Independent Pricing and Regulation Tribunal (IPART).

This would result in NSW councils paying $187million in payroll tax and an estimated additional $531million in fire levies each year. The Government is considering an IPART recommendation allowing councils to raise rates to cover their new tax and levy.

Lord Mayor Clover Moore MP said the changes would cost City of Sydney residents and businesses about $26.2million per annum resulting in average residential rate increases of $70 and $1,200 per business.

"Home owners and businesses in the City of Sydney and across the State will have to bear the cost of these ill-conceived, inappropriate recommendations, without receiving any additional benefits," Ms Moore said.

"If the State Government wants to introduce or change taxes then they should be upfront and have that discussion with the community in the same way councils do.

"The Government should be accountable as why they need this tax and how it will benefit home owners. Local councils should not act as remote tax collectors to prop up the State government's budget.

"It appears the introduction of payroll tax is just a covert plan to raise additional State revenue at a time when businesses and families are already struggling.

"The Government claims to be doing this for efficiency, but it's really about raising taxes and driving up costs for home owners and businesses.

"Up to now, the State Government has been cautious about removing Council's rate pegging limits. This plan to impose a tax slug on Councils to fill its coffers could lead to it allowing rates increases by more than 10 per cent overnight without discussion. But any increase in rates imposed would simply go straight to the State government.

"If the Government does not allow rate caps to increase, residents will still lose with councils forced to cut back essential services like park upgrades, road maintenance and library services.

"City of Sydney ratepayers already contribute significantly to services traditionally the responsibility of the State Government including an expansive CCTV network to assist police, homelessness services and maintenance and management of Crown reserves like Hyde Park.

"The City of Sydney also passes on 50 per cent of net parking fine revenue to the State Government as well as fees collected on large development applications for significant sites.

"Councils, along with schools, hospitals and nursing homes, have traditionally been exempt from payroll tax because they provide essential services for the community," Ms Moore said.

The IPART review also recommends that local government collect the majority of the fire services levy - traditionally collected by insurance companies.

"The work of fire services has expanded to include a range of new activities such as responding to car accidents and counter-terrorism - things which have nothing to do with land value.

"Fire services are a statewide service and should be funded by the State Government.

"It isn't practical or efficient for councils to collect a levy for an essential service like fire safety that is provided and managed by a completely different level of government. There will be no accountability between the generation of revenue and the provision of services.

"Rates are based on the unimproved value of land and the link between this and the provision of fire services is questionable," Ms Moore said.

The City has lodged a submission with the IPART strongly opposing the changes and recommending further review to investigate alternative funding mechanisms.

Media Contact: Josh MacKenzie (02) 9265-9082 or 0402 351 459