Queenstown Lakes District Council finance staff are making preparations to cope with a predicted rise in GST, which is expected to be announced in the Government's May Budget.
QLDC finance general manager Stewart Burns told councillors at a meeting in Wanaka this week the expected rise in GST from 12.5% to 15% could affect council revenue.
The rise in GST had the potential to affect a host of revenue streams - everything from rates, to parking levies, and the price of council rubbish bags, Mr Burns said.
The council needed to be aware of the possible pitfalls a rise in GST could create.
"Unless council is on the front foot, this could trip us up," he said.
The council may need to adjust the price of its goods and services to take into consideration the increased tax.
If an increase in GST is confirmed in the Government Budget next month, the tax rise is expected to take effect from October 1, Mr Burns said.
How the QLDC is going to set rates is advertised at the beginning of the financial year, three months before a rise in GST would take effect.
Council revenue would be affected if rates were set at a GST-inclusive level and the Government then imposed the increased tax from October.
The council could be caught out if it had to pay the 2.5% tax differential after October, Mr Burns said.
Residential ratepayers could also be affected by the rise, because unlike business ratepayers, they were unable to claim GST back, he said.
A solution could be to set rates with the existing 12.5% GST levy for the first three months of the financial year, and if the tax was raised in October, the council could set the rate for the rest of the financial year at 15%, Mr Burns said.
Other councils around New Zealand were considering a "hybrid" GST rates assessment to absorb the increase, he told councillors.
Queenstown's $2 hourly parking-charge rate was another area where the council would either have to absorb the extra 2.5% from the existing levy, or raise prices to accommodate increased GST.
The council's finance team was "looking at all the revenue lines we have", Mr Burns said.
