Dr Michael Gousmett on shifting the burden

According to an article in The Press, the Christchurch City Council is to approach the government regarding the ownership costs of the city’s proposed major facilities. That then shifts the burden from the city’s ratepayers to the country’s taxpayers.

Council trying to lighten load for city ratepayers

“The city council does not want ratepayers bearing the ownership costs of all the central city’s major new facilities and is talking to the Government about alternative options.

…

Mayor Lianne Dalziel told The Press the council was talking to the Government about ownership arrangements and the timing of some of the projects.”

Dr Michael Gousmett has written to us suggesting a different solution:

Shifting the burden from ratepayers to the country’s taxpayers might be fair and reasonable given the underlying reason for having to do so, that is, a natural disaster. 

Has the council considered approaching the ratepayers instead, not to ask for increased revenue from rates which according to the council’s 2013 financial report generated $277 million, or 30 percent of the council’s income of $938 million, in revenue?

The mayor said the council was “agnostic” over whether the Crown or a private sector partner ended up owning and operating the new facilities, but it did not want to carry all the costs.

I am suggesting something else – asking the ratepayers if they would invest in these assets through a share or bond issue by the council to contribute towards the cost of their construction. 

As well as having a sense of ownership, ratepayers could be given preferential treatment by way of a dividend paid at a higher rate, with the council also offering shares to non-ratepayers as well. 

The dividend could then be applied against the rates by way of a non-taxable rebate, or alternatively treated as income in the hands of the ratepayer, whichever they choose to suit their personal tax position. 

We think it's an idea worthy of discussion. What do you think? Drop us a line, or pop a message on our Facebook page.