Dunedin city councillors will gather on Monday to confirm the council's 2010-11 annual plan, but will also consider a council staff report outlining the impact increasing GST will have on the council's books.
The rise in GST, from 12.5% to 15%, was confirmed in Budget announcements earlier this month, and will come into force on October 1.
Council finance and corporate support general manager Athol Stephens told the Otago Daily Times the council's rates would have to rise more than forecast to offset the extra costs the council would face.
If councillors agreed, that would see the 2010-11 forecast rates increase rising by an extra 1.67%, from 5.3% to 6.97%, and the following year by 0.55%, from 9% to 9.55%, he said.
Council staff would also monitor the impact increasing GST had on its revenue from fees and charges, and could opt to increase some of those as well, he said.
However, anyone prepared to pay their annual rates bill in full could avoid the extra charge, Mr Stephens confirmed.
That was because the first invoice sent out by the council would be issued before GST changed on October 1, he said.
Anyone paying their entire annual rates bill in response to that invoice would pay only 12.5% GST on the bill, regardless of when they paid, Mr Stephens said.
However, those who paid in quarterly instalments, for example, would pay 12.5% GST on the first payment, and 15% GST on subsequent bills.
That meant someone facing a $1500 annual rates bill would save $24.75 by paying the full amount, he said.
He said anyone was free to pay their rates in full, but "the extent to which ratepayers may wish to ... is uncertain".
Regardless, the financial outcome for the council was expected to be "about neutral".
That was because the council was only required to transfer GST to the Inland Revenue Department (IRD) in instalments, regardless of when it received rates payments.
In the "unlikely event" all ratepayers paid their bills in full, the council could transfer the first GST instalment to the IRD and bank the rest, earning money in interest to offset extra costs.
However, he doubted many residential customers - many of whom used automatic payments - would change their payment plans to save "a few dollars".
Mr Stephens also stressed the cost of the Forsyth Barr Stadium would remain "neutral", as the council could claim back any increased costs from rising GST, but cautioned against assuming the revised 9.55% rates increase forecast for 2011-12 would remain unchanged.
That figure was yet to be scrutinised as part of next year's annual plan process, which could result in a reduction, he said.
