Land tax

Obviously New Zealand has a problem with escalating land and property prices, especially in Auckland. Can anything effective be done about it? If so is it too late?

NZ Herald reports that John Key has suddenly threatened a land tax to foreign based buyers, possibly including Kiwis living abroad.

Key land tax plan may catch Kiwis who go overseas

In a dramatic shift in position, John Key is threatening to apply a land tax to foreign-based house buyers if there is evidence they are pushing up New Zealand house prices – and it could apply to Kiwis abroad.

The evidence on foreign buyers could be just two weeks away.

A land tax to dampen demand by foreign-based buyers would be a complete flip in the Government’s insistence that overseas speculation has not been a problem in the heated property market, and a switch from its focus on increasing supply.

The Prime Minister told the Herald any land tax could also apply to Kiwis abroad with property in New Zealand after an exemption period of perhaps three years away.

“Subject to our capacity to do so, New Zealanders living abroad would be exempt but you could do it for a period of three years at which point if they retained the property, they might have to start paying [the tax].”

“Me, John Key, going off to London like I did, if we continued to own a house in New Zealand, I’m a New Zealand citizen but I’m a non-resident for tax purposes and, in principle, a land tax could be paid there.”

That could ruffle a few Kiwi feathers. Key:

It was all subject to design and whether it breached tax agreements. Mr Key thought any tax would be less than 10 per cent of the value of a property and be charged annually.

Mr Key said there would be no land tax measure in the May 26 Budget and there was no evidence yet that one was needed.

He is waiting on data on the number of foreign buyers that has been absent from the debate on over-heated house prices, data which will be available in two to three weeks.

Mr Key acknowledged he started looking at options when Labour adopted a policy to ban foreign-based buyers unless they were buying new houses.

“There’s so many ways of ducking and diving through such an exemption that in the end they don’t work very well.”

He had looked at other options, including imposing stamp duty on foreign-based buyers – a one-off payment imposed at the time of transfer of the property.

A land tax was the most effective because it was annual and could be adjusted for conditions.

“If you want it to be much more difficult for a non-resident to buy a property, the most effective way to deal with that issue is a land tax because it is annual, it is expensive, it can be ratcheted up or down.

“It is just a far more effective tool.”

Whether offshore New Zealanders are included would be contentious, but if it is to work fairly it would need to cover as many as possible without targeting or favouring nationalities.

Also at the Herald today: Home truths: Buying frenzy puts homes out of reach

Investors chasing big capital gains in the Auckland property market are making it harder for first-home buyers to afford a house.

And from Emmerson:

NZH0556846605

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24 Comments

  1. Blazer

     /  26th April 2016

    the property price explosion has been screaming for attention for years.Better late than never….’, James Madison, – “the protection of different and unequal faculties of acquiring property [is] the first object of government.” One might add that according to Madison, the U.S. Constitution is intended to provide equal protection to unequal abilities.

    Reply
  2. Klik Bate

     /  26th April 2016

    So long as JK is at the wheel – IT. WILL. NEVER. HAPPEN.

    Reply
    • Nelly Smickers

       /  26th April 2016

      My hubby reckons it’s a bit like the ‘Extradition Treaty’ that China want – so we can send back all them Chinese resident crooks – it will never happen!

      As Wayne said, he can’t understand why the government is dragging the chain on something like that?

      Even he’s registered as an organ donor XD

      Reply
  3. Alan Wilkinson

     /  26th April 2016

    Sounds like Key has lost his marbles. All the people who love coming to NZ but can’t get residency so own a holiday house here will be shut out at great cost for zero benefit to this country. Plain bonkers as well as totally unfair. At 10% of value it is simply a ban on foreign ownership by other means. A classic example of the downward spiral of bad government interventions in the market.

    Reply
    • jamie

       /  26th April 2016

      Good on you for sticking to your principles while the majority of Key’s supporters blindly follow his u-turn.

      Reply
      • Alan Wilkinson

         /  26th April 2016

        I have never hesitated to criticise the Government when they deserve it.

        Reply
    • jamie

       /  26th April 2016

      A question for you about these people who love coming to nz but can’t get residency: What’s wrong with having them rent their holiday accommodation from someone who lives here?

      Reply
      • Nelly Smickers

         /  26th April 2016

        NO WAY!!

        We’ve got a bach at Tindalls Beach – be just our luck to get someone that ate curry 😦

        Reply
      • Alan Wilkinson

         /  26th April 2016

        They already own their place and will have to sell into a collapsed market – outside of Auckland it will be catastrophic for them. Or it will just have loopholes you can drive a truck through by selling the property into a company or trust.

        Reply
        • Kitty Catkin

           /  26th April 2016

          Nelly, you can be very racist. It’s not funny, just indicative of ibigotry. I hope that you don’t work with people from other countries.

          Reply
          • Nelly Smickers

             /  26th April 2016

            @kittykitty

            I work with people of all race, color and creed every day!

            They would all say, “What a kind and caring lady, butter wouldn’t melt in her mouth” 😉

            Reply
            • patupaiarehe

               /  26th April 2016

              He ngeru kawa 🙂

            • Nelly Smickers

               /  26th April 2016

              @ patupiearehe

              At the hospital where I work, we hand out the following info cards:

              ‘In the interests of Patient safety, sign language, translators and other services necessary for effective staff communication are available free of charge to people who are deaf, or hard of hearing. Translator’s for those who do not speak English are also available upon request’

              Would you like to avail yourself patu? XD

          • patupaiarehe

             /  26th April 2016

            Yeah, nah. 🙂 My current employer rewards my efforts well enough to keep me (almost) interested….
            Te Reo is more of a hobby for me…

            He hahau te taupatupatu, engari he ngahau.

            Which means…

            The debate was lively but good-humoured.

            Reply
  4. Blazer

     /  26th April 2016

    if the aim is for NZ’ers to become tenants in their own country…do nothing!

    Reply
    • Alan Wilkinson

       /  26th April 2016

      If you want to become like Venezuela or Zimbabwe do this sort of stuff. Who will invest in this country if the government will confiscate your property at whim?

      Reply
      • Blazer

         /  26th April 2016

        why don’t asian countries have the same regime?Are they stupid?

        Reply
      • Gezza

         /  26th April 2016

        Mugabe is just another African dictator. They can’t get past the tribalism and the associated corruption.

        Reply
  5. Kitty Catkin

     /  26th April 2016

    Emmerson will offend people who lost relations in wars with this cartoons-also many who served in the army. It’s in poor taste.

    Reply
    • Gezza

       /  26th April 2016

      Bollocks Kitty. You might be offended perhaps but I can’t think of anyone else I know who’d be offended by that and my dear departed WWII vet dad & mates would be farting with laughter at it.

      Reply
    • patupaiarehe

       /  26th April 2016

      Criticism only hurts when it should Kitty…

      Reply

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