Local body Rates are feudal relic and should be abolished. There is no obvious and equitable link between taxation (of property) by local government and the delivery of services to all its citizens.
Reform could be in the areas of:
- Central Government apportions 2% (as example) of your lowest income and business tax threshold to your local government (with all other current block grants and subsidies removed)
- Central Government apportions and transfers 2.5% (as example) of the GST collected by business located within the local authority.
I don't know how much money this would yield in practice, or if it would cover all expenditures currently required from local governments.
The competences of local government need looking at too, e.g. do they have to provide more than town planning, sewage, planning and foot paths? Why do they have to provide social housing, community development, libraries and roads when all that should be done, IMO, by central goverment, i.e. libraries would become branches of the National library; Transit NZ (or whatever it's called now) should be doing all roading instead of just state highways; etc
Businesses would need some tax sent to local government, too.
This would also likely result in tax increases, and probably progressive ones too, so I can't see it happening under the current government where we need either Act or National to get a bill through.
Currently asset owners are already vastly favoured over working earners for tax purposes. If I earn $50k, I pay around 30% tax on it. If I make $50 on buying and selling a house, I pay no tax whatever.
Rates is about the only asset tax we have.
I'd actually suggest an alternative, community based system. Local authorities would have a charter setting out their areas of competence and taxing powers. Subject to this, they would be allowed to choose to tax income, wealth or property at any level they chose. So if the residents of an area wanted to take over education, or policing, they could.
(I might post some more ideas on this as it's own bill).
That's a pretty neat proposal as well.
The problem I have with rates is essentially that they hit poorer renters harder than they hit property owner- so allowing local governments to switch without dictating how they have to is an even better solution that fits well with the grassroots principle. I'm sure that last bit alone would get the Greens onside :)