Councils are taking millions of dollars of unpaid rates through people's mortgages. 

A little-known clause of the Local Government Act gives councils the power to force banks or finance companies to cover unpaid rates. 

It's used as a last resort after exhausting all other avenues to getting rates paid.

Taxpayers' Union Local Government Spokesperson, Sam Warren, says it wouldn't be needed as much if there was more sensible spending. 

"I want to see a lot more done by councils to rein in that spending and get rates down as low as possible so this doesn't happen." 

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