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Govt won't reap GST windfalls from leaky homes: Treasury

Fuseworks Media
Fuseworks Media

Wellington, March 26 NZPA - A Treasury brief from December says the Government will not reap big GST windfalls from work done on leaky homes, contradicting a report undertaken by North Shore City Council suggesting otherwise.

North Shore Mayor Andrew Williams said an independent report done for the council showed the Government would benefit to the tune of $2 million from the repair of leaky homes.

"The report shows that for every dollar spent on repairing a leaky home, the Government will gain a windfall of 25 cents in increased revenue from GST and tax on other transactions directly involved in the repair," Mr Williams said.

He said benefits from reduced unemployment, and savings in public health costs associated with leaky home victims could be added to that windfall.

The report was carried out to try to put more pressure on the Government to pay more towards the problems facing many affected homeowners.

Mr Williams said central government needed to take responsibility for deregulating the building industry in 1990, which opened the way for less responsible building practices and accountability.

But Building and Construction Minister Maurice Williamson today released a Treasury briefing paper from December on the GST issue.

"In short, expenditure on repairing leaky homes is likely to have no impact on overall GST receipts," the report said.

"GST is a broad-based tax and the money the Government, councils and homeowners spend on repairing leaky homes would otherwise be spent on other goods and services elsewhere in the economy," it said. "These goods and services would also be subject to GST so there is unlikely to be any net increase in GST."

The briefing paper said loans would have to be taken out by individuals and councils to repair leaky homes, and while short term GST gains to the Government were likely, in the long term the servicing of those loans would equate to less expenditure on GST goods and services further down the track.

Mr Williamson said the Government had "a process under way" into addressing the leaky homes crisis, and no further comment would be made.

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