Ardern ‘clarifies’ on land tax

More tax confusion from Jacinda Ardern yesterday, this time on whether some sort of land tax would be considered by their proposed tax working group.

RNZ:  Labour clarifies land tax position

Ms Ardern said Labour’s target was not the family home.

But when pressed by reporters, she suggested that guarantee only covered the building itself and not the land.

“Yes, that’s the complication of those various iterations,” she said.

“That’s why I’m saying to the tax working group – ‘I want the family home to be off the table, please work through the options that remain available to address home ownership and to address affordability and to make sure our taxation system is fair’.”

Ms Ardern was then asked again if she was leaving open the possibility of taxing the land on which the home sat.

“I’m saying that I don’t want there to be taxation applying to a family home,” she said. “The rest is for the working group to work through.”

So news reports came out saying that a land tax was potentially on the table.

A land tax generally takes the form of an annual levy based on the value of the land.

It was one of the recommendations – as part of a broader tax reform package – made by the 2010 Tax Working Group. It was rejected by the National government at the time.

RNZ themselves interviewed someone about how a land tax might work, and what it’s benefits could be:

An expert explanation of land tax

Michael Littlewood is an Auckland University Law Professor and tax expert. He joins Checkpoint to discuss how a land tax would work.

But since then Ardern has clarified.

Labour Party leader Jacinda Ardern has ruled out introducing any tax which would hit either the family home or the land it sits on, saying that’s “completely off the table”.

Ms Ardern has always ruled out introducing a capital gains tax on the family home.

She’s now gone further, saying she’d instruct the working group to stay away from any policies which would affect the home or the land on which it is built.

“My message will be very clear to them – do not bring me any recommendation that includes the family home or the land that a family home sits on.”

Ms Ardern said the tax working group could still consider the possibility of a land tax, but not one which would hit the land underneath a family’s house.

“That will not be up for consideration. It’s completely off the table.”

Some of Labour’s tax policy seems to be still evolving.

The big question is how much more it might evolve should Labour get into government.

Ardern (and Grant Robertson and Labour for a couple of years now) have been pushing the line that they want to wait to listen to experts before making decisions on tax changes, but when they get advice it will be too urgent to wait until the next election to get a mandate for changes.

Over the course of this campaign Ardern has been ruling out an increasing number of possible tax changes, so the tax working group may not have much to work with.

Ardern and Labour have also frequently mentioned the National flip on GST after the 2008 election as some sort of justification for deferring tax policy until after the election as if that would make a surprise tax package ok.

So far Labour have not responded to requests to publish possible terms of reference for their tax working group, nor will the indicate who might be appointed to the group.

Tax continues to be one of Labour’s biggest weaknesses in this campaign.

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29 Comments

  1. chrism56

     /  September 7, 2017

    The fact that the leader cannot articulate their tax policy (but needs to “clarify” it after discussions with her team), makes one believe that she isn’t leader but figure head. Either that, or the tax policy is electorally unpalatable.

    • Pete Kane

       /  September 7, 2017

      Not an entirely unreasonable point one must admit 56.

      • Blazer

         /  September 7, 2017

        Is she meant to know every single detail,about every single issue?Yet to see a leader capable of that.I note National has no problems granting ministerial portfolios to people with no idea…e.g..Minister for Climate Change..P.Bennett…’what do you know about climate change?P.B..answer…..NOTHING!Very good.

        • chrism56

           /  September 7, 2017

          That is a poor attempt at deflection Blazer, surely you can do a lot better than that. She should be across the policy and be able to answer detail because her statements on the issue have been “I” or “me” ones.
          On her answers to date, it is obvious that they have the policy that land will be taxed and there will be a Capital Gains tax, very similar to what has been previous Labour Policy. However, they know it is electorally unpalatable so they want it to be given the veneer of Working Group recommendations.

    • Blazer

       /  September 7, 2017

      Try the current Minister of Finance,economic illiterate and a huge failure at…maths!

    • Corky

       /  September 7, 2017

      I would say both.

  2. David

     /  September 7, 2017

    i am beginning to think this will cost her a couple of percent and the election, also she is way to urban centric and a term as opposition leader engaging with where the wealth comes from would help.

    • Mefrostate

       /  September 7, 2017

      Dairy farming & processing contributes 3.5% of NZ’s GDP. Other primary industries another 4%.

      Auckland contributes 37%

      • chrism56

         /  September 7, 2017

        How much of our export earnings does dairy provide? After all, that is what pays for all the consumer goods and interest on loans from overseas banks for Aucklanders’ houses.

  3. Corky

     /  September 7, 2017

    Just when the spectre of a footless Andy was fading from our consciousness.

  4. Gezza

     /  September 7, 2017

    🤔 Hmm.
    😕 Didn’t take long.
    😡 It’s starting to look like she might have to go. Who else have they got? 😳

  5. More questions than answers.

    • Blazer

       /  September 7, 2017

      these are questions best left to..experts.Ardern makes no claim of being an..expert.The current Minister of Finance identified an 11.5 billion ‘hole’,that doesn’t..exist..FFS!

      • Corky

         /  September 7, 2017

        Sorry, that strawman wont work. She is the leader. She should instill voter confidence when she talks about Labours policies. Voters have no problem understanding where Bill is coming from.

        • Blazer

           /  September 7, 2017

          but he has been around ..forever…everyone knows he’s the Double Dipper from Dipton….who swims in the Oreti river.

          • Corky

             /  September 7, 2017

            Now you are allowing the strawmans relatives to join in.

    • High Flying Duck

       /  September 7, 2017

      Not actually that difficult a question to answer.
      On farms the house plus the land on which the house sits and is directly adjacent is already a separate exempt supply for GST purposes. I assume this criteria would simply carry on into the income tax rules for the purpose of a land tax.

      • Blazer

         /  September 7, 2017

        I am starting to think you..are..a tax expert HFD.Good answer.

        • Ray

           /  September 7, 2017

          Steady Blazer, you have been spinning so much this morning you are getting dizzy.

      • PDB

         /  September 7, 2017

        http://www.scoop.co.nz/stories/PO1709/S00094/lets-tax-this-what-are-we-in-for-labour.htm

        Federated farmers: “The last time a land tax was considered (2010), the agricultural taxable land base was $105 billion, meaning a 0.5% land tax would cost farmers $525 million per annum – a massive hit on the sector, and thus on regional economies and rural towns.”

        • Jay3

           /  September 7, 2017

          Aha, so a land tax combined with a likely inheritance tax ( which Robertson will not rule out) is how they are going to overcome the problem of zero funding increases in the budget projections for later in their three year term. What a cunning plan from Labour.

          • High Flying Duck

             /  September 7, 2017

            Previous land tax proposals have focused on unproductive land as an inducement to develop rather than landbanking. It sounds like Labour are wanting their tax working group to propose something far broader. Unless land tax is a distraction from the CGT on farms and businesses debate.

            • Revel

               /  September 7, 2017

              Considering the rate of increases in property prices it would be cheaper just to pay the land tax as a cost of carry. Unless the rate of land tax is 10% pa plus for this.

            • High Flying Duck

               /  September 7, 2017

              The land tax simply tips the scales by increasing holding costs on non-income earning assets. In times of high capital gain you are correct that this is a reasonable “cost of carry”. However the point at which it becomes marginal or leads to negative real returns is lowered by the tax amount. And in the interim it provides another income source for government to use for infrastructure.
              Taxing productive assets would be a retrograde step in my view, but if they avoid this aspect I see more merit in this idea than the CGT.

        • sorethumb

           /  September 7, 2017

          This election seems to be coming down to “don’t tax my assets” and a rationalisation of what it deserved and undeserved wealth. All this could and should have been sorted years ago and we wouldn’t have had the incentives we have now (including mass immigration – of house, land and goods and sevice buyers).
          Gareth Morgan is right.

          • Revel

             /  September 7, 2017

            Wealth in the family home is just as deserved as wealth in any other asset. Why exempt a family home when most people move far more frequently than in the glory years of Muldoon?

        • Blazer

           /  September 7, 2017

          almost the most powerful union in the country…easily the most..selfish.

  6. Alan Wilkinson

     /  September 7, 2017

    The only justification for the capital gains tax is the “tax someone else” syndrome. It certainly won’t make housing affordable as it has failed everywhere else. And those with the biggest and most expensive family homes will be laughing loudest at the stupidity of it all while building an even bigger palace to move into.

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