Media Statement

2 August 2007

Council has only itself to blame on Real Estate Transfer Tax PR fiasco

Manukau City Council has recommended a law change to give it and other territorial authorities the power to charge a conveyance tax that could cost property owners thousands of dollars and make home ownership less affordable for young New Zealanders.

The fact that the Council is now struggling to manage the emerging bad publicity is solely due to the fact that the councillors have recommended a bad policy option, according to Daniel Newman, a member of the Manurewa Community Board.

“The Council should not blame media reporting for the bad publicity created by its move to recommend a law change to enable it to charge a Real Estate Transfer Tax (RETT). The Council should blame its own councillors. They are the people who collectively voted in favour of a recommendation to seek a law change. They alone need to take responsibility as proponents of this ill-conceived tax,” Daniel Newman said.

The Council’s submission was drafted by a working party of councillors and officers. The submission recommended that:

“…. Territorial Local Authorities should be empowered to implement a Real Estate Transfer Tax of up to X% of the gross sale price of all real estate sales within their respective territorial districts and that the funds raised by the RETT be applied for the same purposes as the TLAs General Rate.”

The proposal was debated at the Strategic Directions Committee (17 April meeting) chaired by Cr Colleen Brown, which then recommended to Council that the submission be forwarded to the Local Government Rates Inquiry Panel. The Council (26 April) endorsed the Committee’s recommendations and approved the lodgement of the submission.

Analysis of similar taxes applied overseas reveals the magnitude of the amount charged. A first home buyer who buys a $350,000 house in Canberra can be required to pay $12,507 in stamp duties.

“The Local Government Rates Inquiry was set up as a consequence of public concern in light of financial and rates projections, and confirmed in local authority rating decisions from June to August last year. Yet Manukau City Council has turned the Inquiry into an opportunity to recommend a Trojan horse tax, which would hit first home-buyers in the pocket.

“The fact that the Council is now using its communications staff to defend the anti-home ownership tax recommendations of the councillors speaks volumes. It’s time the councillors fessed up, owned their mistakes, retracted their own recommendation and apologised to the people of Manukau City,” Daniel Newman said.

ENDS

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