By Gareth Vaughan
The Government's Tax Working Group, the Productivity Commission and the OECD have all suggested New Zealand should consider introducing a land tax.
But heading into the September 23 election none of our major political parties are proposing one. Instead the tax debate is focused around the possibility of a Capital Gains Tax, excluding the family home, possibly being introduced if Labour win.
Ryan Greenaway-McGrevy, a senior lecturer in economics at the University of Auckland, is a fan of a land tax. In a Double Shot interview he explained why.
Greenaway-McGrevy says many taxes come with bad unintended consequences usually as people try to avoid paying them. This happens because tax influences peoples incentives and behaviours, often in counterproductive ways.
"We tax income, we tax work. That reduces the return for working and that could act as a disincentive for people to take on additional work," says Greenaway-McGrevy.
"If we think about taxing capital through say a capital gains tax, that affects a person's incentive to invest. And as a consequence they may invest less in new residential construction, they may invest less in businesses, less in companies. Arguably that would be a bad outcome."
If you tax a particular activity it reduces the incentive to perform that activity, Greenaway-McGrevy adds.
"When it comes to land, however, the amount of land is fixed. So if you are going to tax landowners they can't turn around and say 'well we are going to react to that by making less land.' So we're not going to affect the total amount of land in the economy if we choose to tax it. So that's one of the reasons why I favour it and a lot of other economists favour it [a land tax]. It's a very efficient form of taxation. It's one of the reasons why the Tax Working Group was in favour of it. Essentially because it minimises those bad unintended outcomes [and] it could also potentially result in some good unintended consequences."
So how would a land tax be structured and paid?
"Usually it would be levied in the land value embedded in a property. So if you think about your typical residential home [with a] freehold land title, if it's worth $1 million according to the assessor perhaps the improvements or the residential structure's worth $300,000. Subtract that off [and] you're left with the value of the underlying land of let's say $700,000. The land tax would be levied on that...[at] say 1%," says Greenaway-McGrevy.
"Back in 2010 it was estimated that would bring in about $4.6 billion, taking into account that land values would fall after the tax is implemented. The Tax Working Group thought they'd fall by about 17%. We've seen massive price appreciation in the value of residential land, so we might see more money being raised these days."
Greenaway-McGrevy says land values falling would be a good thing in the context of tackling housing affordability problems with many potential first home buyers deposit constrained, because they require 10%, or in most cases a 20% deposit under the loan-to-value ratio (LVR) restrictions.
"So bringing down house prices through reducing the value of land could get more first time home buyers into a home. However, you have to recognise that it's only those individuals that are deposit constrained that are going to benefit from it. Because as soon as you buy that house you have this tax liability going forward, - the land tax," Greenaway-McGrevy says.
Additionally he points out a land tax could hit both landbankers and wealthy foreigners buying up New Zealand land.
"It creates a tremendous incentive to develop land to its full potential because any improvements that you add to the land will not be taxed. And any improvements that you make will help you offset that tax liability. So right now we arguably have a landbanking problem in Auckland in particular and this [land tax] would disincentivise that option value of sitting around and waiting to develop that piece of land. You really want to do it [develop] sooner rather than later when you've got this tax liability," Greenaway-McGrevy says.
"For better or worse right now we allow foreigners to come in a buy some of the most pristine parts of the country. I'm of the opinion that if we are going to do that, we should be taxing these individuals. Why? Well right now their contribution is rather small to New Zealand through council rates, and if they're buying goods and services through GST. If you think about why New Zealand's so attractive, one we've got a lot of natural beauty. We're also a stable, liberal democracy that's developed. So these people are benefiting from the fact that the New Zealand economy is stable and relatively prosperous. They should be contributing to it one way or another. A land tax would achieve that. It would do so in a very efficient way as well because it's very hard to avoid."
Greenaway-McGrevy says a land tax would be levied by the central government, meaning it would come on top of rates land owners already pay to local government. But to compensate for the addition of a land tax, tax would be offset elsewhere.
"We'd implement a land tax and perhaps reduce income tax or reduce GST. And the goal would be that the average New Zealander would be left no better or worse off," he says.
Here's the Tax Working Group's 2010 report.
Here's a 2009 Motu paper from Andrew Coleman and Tax Working Group member Arthur Grimes on property and land taxes.
Here's Productivity Commission chairman Murray Sherwin talking to Alex Tarrant about land tax and other topics.
And the OECD has suggested New Zealand ought to "implement a capital gains tax and boost environmental and property or land taxes to facilitate a more efficient and equitable tax structure."
136 Comments
Could also be raised to a higher level for overseas owners not paying their primary income tax in NZ to disincentive them parking their dirty cash here. Apparently the most in demand assistance dog right now is cash dogs (trained to sniff cash) working at the airports, cant train enough apparently. One wonders how much of India's cash economy is arriving in NZ in suitcases...
It is a good form of taxation except for one (major) issue - not everyone has cash in hand to pay it (eg people who for what ever reason own land but have little income). So you have to have some option for accumulating a tax debt against the land title until it is so large that the govt takes ownership, or until a sale occurs.
And it will hammer the value of large amounts of non-productive land (like multimillion dollar holiday homes). Which will piss off a lot of folks.
"cash" this seems to make no sense. Considering the vulnerable, If you are an OAP say, you pay the land tax but you pay less GST or less income tax, you are no worse off. In fact if you look at TOPs policy you cath ppl not paying tax as a result the bottom 80% of people are better off.
P*ss off those owning multi-million dollar homes. The very ppl who frankly are already probably paying little tax in % terms and whose income is probably parasitic in nature anyway, I have no problem with this what so ever.
haha, I just like to know what sort of weed this senior Dr. is on at the moment , cause it seems to be very good quality !!
lol, so a land tax for a FHB will actually add over 1% to his mortgage interest rate !! ...well that would be helpful eh? .... good luck with that !!
Really? From Wikipedia "New Zealand makes a distinction between "Land Taxes" and "Property Taxes". The traditional concept of property tax may choose to apply the same rate to both improvement values and land values. A pure land tax exempts improvement values from taxation altogether and taxes only land values. A graded, dual-rate, or split-rate property tax applies a lower rate to improvement values. The term land tax valuation is used to represent both its pure and partial forms.[27] Conceptually, a property tax is a proxy for income tax and, rightly or wrongly, presumes that a certain level of property holdings indicate a certain ability to pay taxes on a regular basis. In contrast, an LVT is about the land itself – its scarcity, immovability and centrality to human activity.[28]
Although New Zealand's land tax was abolished by the Land Tax Abolition Act (1990) which took effect from 31 March 1992, a land tax was the very first direct tax ever imposed on New Zealanders, by the Land Tax Act (1878). A property tax followed the next year (the Property Tax Act 1879). When first enacted, this charged a rate of one penny in the pound (i.e. 1/240th or 0.4%), but a massive £500 exemption applied, exempting most people from tax liability.
The land tax was initially a major source of government revenue. In 1895 it made up 76% of the total land and income tax revenue received by the government.[29] In 1960, land tax contributed 6% of direct tax revenues, and by 1967, in a report recommending the abolition of land taxes, a committee chaired by Auckland Accountant Lewis Ross noted that a mere 0.5% of total government revenue now came from land taxes. The government did not act on the Ross recommendation to abolish land taxes.
By 1982 only 5% of total land value was taxed, and land taxes were also thought to be duplicative due to their similarity to local authority property rate levies, with property taxes making up 57% of local government income by 2001"
So even with a very watered down land tax, where only "only 5% of total land value was taxed" - if this hadn't been abolished ion 1992 - could GST have remained at 10%, would there have been no need to introduce the 39% income bracket in 1999.
Sounds good to me as both an income earner and a land owner. Bring it back I say and restructure the burden.
Looks like he wasn't perfect, "McKenzie realised his modest dream of unlocking the land for small farmers, but at the expense of Māori. Many of his policies were aimed at making land held under Māori ownership available for sale. His land for settlements policy assured him a place in the national hall of fame, but his native land policy widened the fracture in the New Zealand dream"
TOP's policy is to lower all income tax rates by upto a third (will depend on the level of deemed return on capital) so your top rate for income will drop from 33% to 22%.
Assuming an 11% reduction in income tax and a deemed return of 5% would see anyone whose equity is less than 10x their income better off - this is the 80% they refer to
For those wondering what such a tax might mean for the likes of farmers and retirees, the Tax Working Group's report had this to say;
The equity impacts of a land tax are also unclear. Firstly, it taxes only one component of wealth, and therefore mainly impacts those people and organisations holding their wealth in that form. Retirees, Maori authorities and farmers could be particularly affected. Tax bases that use broader measures of wealth, income or consumption better meet social conceptions of horizontal equity.
Annual payment of land tax liabilities may also give rise to cashflow issues for some landowners with lower income levels, such as retired people. A possible solution would be to allow these taxpayers to defer the tax (plus an interest charge) until sale or death. However, most estates that seek deferral will have major liabilities for land tax. There would also be lock-in effects for those in deferred payment schemes, although this could be mitigated with some form of roll-over relief.
The significance of some of these effects will depend on the rate of tax set and how far other offsetting mechanisms are used – such as rebates of the type used currently to limit the impact of local authority rates on poorer households. Equity impacts may lead to pressure for exemptions, which raises concerns about the sustainability of such a tax.
The Group also considered some options for reducing the burden of a land tax on land extensive activities. One such option is a value-per-hectare threshold below which no land tax is payable. This would tend to shield land extensive activities such as farming and forestry. To the extent there is a positive association between land values and incomes, this type of threshold may also ease the tax burden and cashflow concerns for lower-income families. As a result, this proposal might ameliorate some of the equity concerns without accentuating integrity and revenue sustainability problems.
"defer the tax (plus an interest charge) until sale or death"
I wonder what happens to those unfortunate enough to live longer than the tax value of their retirement unit?
Maybe they will just keep living there (where else would they go?) and the debt grows on the estate. When they die the children pay that estate tax, which is now greater than the value of the estate. Whoops, another inter-generational tax?
Now, Is anyone still wondering why it was NOT adopted ???
So what will happen to rents?? if all of a sudden the cost of running the property goes up by about 30%-40% of the current annual rent of a house ?? ....Will this tax be passed on to tenants ? .... My guess it should ..... oops!
This is why an equity tax is fairer. As the tax debt owes increases, the tax required decreases so you never end up with a debt bigger than the equity. For example, an equity tax at 1.5%/year for 50 years would reduce the equity by 47% (assuming no further capital gains)
Tothepoint have a look at these:
8 Kitirawa Road. 2014 CV = $2,100,000
Land value = $1,960,000 / Improvement value = $140,000
https://www.aucklandcouncil.govt.nz/property-rates-valuations/Pages/rat…
17 Komaru Street. 2014 CV = $2,250,000
Land value = $2,100,000 / Improvement value = $150,000
https://www.aucklandcouncil.govt.nz/property-rates-valuations/Pages/rat…
Agree - Labour will tax anything and everything. So, expect a land tax if you support Taxinda.
The interview was not about political associations and projections on potential leaders. It was about what land tax is and how it can work. What was most interesting is that the interviewee explains the relationship between taxes and implications / consequences. I recommend watching the interview.
Now lets assess the outcomes. Land prices would fall significantly. Which would mean that it's now far less capital intensive to build a house. Also, it would encourage landholders to maximise productive usage of their land, which would mean more development, which would mean more tenancy space which would actually have the effect of dropping rents and property prices further as the supply catches up. This is the solution.
Land values will fall 17% on a 1% land tax according to the article. Cost of land for a developer is the cost of borrowing + tax. Therefore you can work out the magic numbers, as this Land Tax only becomes an incentive if it reduces costs of development. 1/17 = 5.88%. If a developer can borrow money for less than 5.88% now, she will have more incentive to develop now than after a 1% land tax is imposed. If the cost of borrowing is greater than 5.88% a land tax is a brilliant idea.
For simplicity let's say that a developer buys a $1million piece of land and develops it in 1 year. Using your discount, an LVT would mean that the land was $170k cheaper, and the LVT at 1% for that year would cost 10k. So that's 160k less that the developer would need to come up with. Plus the interest savings on that 160k which at 5% actually works out at another $8k saving. So in reality the developer would need $168k less, and the banks would make $8k less, and the government $10k more. So this is a fantastic shift of money away from the banks and to the government which gets spent in our society instead of being shipped off to Aussie.
I would say the banks are a good part of the reason why they removed LVT in the first place, less money for them.
That is a motivation merely to sell land, which causes the 17% drop in property prices. The land and housing will then be taken up by first home buyers who are lacking deposit value at today's insane prices and they'll be paying the tax so won't be able to raise the capital to get on with development.
Developers are not attracted to this equation.
Whoever buys it will want to optimise it's use to pay the LVT. It's great because it means that those who will make the best use of the land will be more able and more likely to purchase the land, instead of someone who just wants to occupy it for those sweet CG's.
People who have funding to develop are currently being put off by Auckland's silly high land prices, because Phil Goff. So Auckland has a very slow rate of housing construction. A land tax would make it even less profitable to develop in Auckland, people with funding to develop getting less motivated. A land tax would also lower prices and people without funding to develop will be more able to purchase housing. The people who will make best use of the land will be less able and less likely to purchase.
From the Tax Working Group's report;
However, a land tax would be expected to cause an initial fall in the value of land by up to the net present value of the expected future land tax liabilities. Hence, a land tax constitutes a lump-sum tax on those who own land at the date of its introduction. The size of the drop in land values will depend on the rate of tax and the expected fall in net-of-tax real returns from the land. This will tend to adversely affect existing land owners and others who have invested directly or indirectly in land. For example, people who currently have heavily geared land holdings may have negative net equity following any land price falls. On the other hand, the introduction of a land tax would be expected to reduce net foreign borrowing.
Given the land value reduction, existing rents may not increase as returns based on land values may not change (where a landlord acquires land post the introduction of the land tax). Alternatively, existing landlords may want to increase rents to cover the additional costs. The drop in land values will put pressure on property developers to develop existing land as soon as possible rather than retaining this for future development.
I like the increasing productivity side of a land tax and the fall in value.. but, as with TOP's policy the money has to come from somewhere.. The GST dropping would be useful {not sure how long that would last} ...and negotiable till death so we don't end up off the land and on the street. So did the working group look at a Financial transaction tax?
TOP plan is to reduce income tax rather than GST by around a third which is rather significant. I think a FTT was looked at Labour's last review because of Jim Anderton's insistence. The issue with FTT was the cascading effect and, therefore, they recommended against it.
Everything depends on the Value of the Land.
How to assess it?
- Latest GV (the simplest because all the data is there, and in one place. But as re-vals are staggered across TLA's, will cause temporal distortions)
- Latest sale minus improvements 'value' (how to assess?)
- NPV of expected income derived from it (but how to assess That, over what period, at what discount rate?)
- Deemed value (aka PDOOMA) somewhat as for the FIF regime
- Something else, to be determined by a TWG of unknown composition, but certainly implemented with great gusto by lunchtime the day after they report
Then add in a challenge-to-value process, an implementation smoothing regime, the inevitable half-dozen revisions as the Battle Plan meets Reality, and there's a recipe for a coupla decades worth of confusion.
Ooh, but just yummy consultancy - it's a IT dream.......
It is a great idea in theory. I guess the way to try it out is very tentatively at first, say at 0.1% of land value per annum, then review it after three years. If it seems good you can then put it up to 0.2%. Then three years later to 0.3%, and so on. That allows a realistic time for figuring out how to do it and what the fish hooks are.
It all depends on trust in the government though, to reduce tax elsewhere. More money to buy votes, or fund infastructure for more immigrants, or any number of daft but fashionable ideas, eh....
Yes, it would presumably reduce the attractiveness of the "We Need More People and More Houses" business model so beloved of the previous Labour, and current National, administrations.
Arguably, we have gone from a country based on selling food and mining (with the attendant boom and busts that go with that) to one (rather pathetically) overdependent on new people and new money from overseas. Interesting that this shift in how we earn our way in the world has mirrored the untaxing of land. Not an accident, I suspect.
"The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "my ignorance is just as good as your knowledge." - Isaac Asimov.
Don't make it a thing here too please.
So true, Ludwig.
Perhaps you should ask interest.co.nz to let you do some guest articles or interviews.
But why stop there - why don't you present at a peer conference? Perhaps you, Tothepoint and Eco Bird could co author something?
Submit an abstract and see how you get on. I'd love to see the keyboard warrior show us what he's made of.
More drivel from another clueless academic with no real world experience. No doubt, he's been peddling the same disproven economic theories to his students for years...EMH, etc, and we're supposed to take him seriously. Give me a break!
So you know better based on your education at the University of Hard Knocks? What is your experience with the introduction of land taxes? How do you disprove the effectiveness and consequences of land tax? By being a chip off the old block?
I've been through the school of hard knocks and also majored, among other things, in the dismal science at the University of Auckland, so spare me your condescending 'Emperor's Clothes' lecture. We are already highly taxed, and property in general has become one of the only forms of saving left for the average person (which is obviously at odds with your communist/socialist thinking). Why? Economic policies (influenced in large part by your highly esteemed economists) over the last 30-40yrs...QE, artificially low interest rates, ever rising govt debt, etc, have destroyed the integrity of traditional bank savings. So, by taxing property, you will effectively destroy the capital base for most of NZ's SMEs, which are backed by property collateral, and are the key employers in this country. Never mind, it's more important to tax, tax, tax and tip more money into the social welfare drain. Absolutely no solid evidence showing improved social outcomes from spending tens of billions on eradicating this and that every year. Maybe a hundred billion a year will do it? Einstein's saying comes to mind, but he was a school drop out, so no doubt you wouldn't rate his opinion...
So you obviously didn't bother to listen to the interview as tax neutrality was discussed. Secondly, one of the core points about this interview subject matter was the implications and consequences of land tax to address current issues of concern (you obviously didn't listen to the interview, so you wouldn't understand this). Solid evidence" is best based on empirical work, not a digital soapbox where you can toss around words like "commie" and rant like you've knocked back too many beers at the BBQ.
It is harder than it was.
The biggest positive right now is the cost of money is very very low, it is government policy in the western world to discourage savings and promote borrowing.
Borrowing to start a business is riskier than saving. It also traps you in a bad relationship, the bank, who don't care about your employees or your troubles and will not stick with you through any hard time.
If you are poor then there are less options to borrow because you have no collateral, so a borrowing based business startup model disadvantages poor families.
If interest rates ever go up, then it's a bit of a disaster and a higher portion of startups will go bankrupt than if they had saved their way into business.
Does Government Spending Create More Economic Growth?
https://mises.org/blog/does-government-spending-create-more-economic-gr…
This would result in increasing inequality for the lowest decile, which has a large component of retirees that own a home and are dependent on super. Unintended consequences indeed.
To be fair, I am not opposed to a land tax, the fun part is in the offsetting tax reduction so as to return to neutral overall tax take. For that matter, I am for a comprehensive CGT, with NO exceptions, not primary home, etc. I am opposed to the TOP wealth tax concept which has unfortunate unintended consequences IMO.
Wow! I am starting to swing towards voting for National.
It seems that if Labour get in I'm going to be raped and pillaged.
The contradiction for me is that I believe its thanks to the excessive population growth that Labour wants these new tax streams.
I will probably vote Winston and hope he backs National and do some more hoping that he can get them to pull the brakes on Immigration.
Labour have already pillaged me once changing my landrights on coastal bushland I purchased as a young man. When I purchased the land it could be cleared and put into grazing or forestry or subdivision or what have you. It was clear title. At the stroke of a pen the land was zoned a special landscape and I lost my landrights but still get to pay the rates on what has basically become DOC estate.
I had no intention of clearing the bush but by changing my landrights with no compensation, the land value was degraded. This might not sound like a big deal but the value of land effects your security for lending money on other projects.
Be careful what you wish for with all these new taxes folks. Robbing the rich so we can all be poor together sounds a bit boring to me. One of the great things about being a NZer was that it is a land of opportunity where if you worked hard and spent wisely you could get ahead. If spending wisely just means more tax we will all just sit around drinking beer and being mediocre. If we all sit around drinking beer and being mediocre then after a while there will be less productivity to generate the wealth you are all so keen to tax.
Perhaps instead of looking at ways to tax money from the rich you might all have more fun giving it ago at becoming rich.
Yes I agree Independent - Observer. It is harder now than ever before. I believe the larger the population the harder it will be.
A large proportion of our population is still drunk on the good fortune of their capital gains these last 5 yrs. They don't seem to get it that if they sell they are buying back on the same market so in fact it is just the property investors who got rich.
Meanwhile the people not in the property market are almost locked in to the poverty of renting.
If the population growth is stopped, and the foreign investors stopped then the housing shortage will catch up and the property market will come back into balance to what a working class NZer can afford.
We will then be back to an even playing field except we still have to spend billions on the infrastructure needed for the population growth we have had.
I have friends who still pay rent and who tell me I am lucky. I think back to when we were young and they were drunk stoners, I was working 60 plus hours a week with some partying chucked in but the big difference was I had goals.
The older generation has always been the landholding generation. We can't take our land with us when we kick off so there will always be a new person stepping up to be the property owner. So in fact there will always be opportunity. The recipe for that opportunity will change but it will always be there for people who have goals and who make good decisions.
The increased productivity is all on borrowed money building infrastructure and now both major parties are talking about the taxpayer building houses for the displaced NZers.
Increased productivity would be reflected in our export earnings which have gone down, not up.
We are not more productive, we as a nation have borrowed lots of money and now have more people to share our productivity with.
Sometimes I wonder if any of our economists have ever run a business or are their opinions all theory.
If and when we cut back on immigration we will go into recession as many of the immigrants do bring in money.
But we can't just live off selling our low population demographic as at some point we will have damaged our lifestyle so badly that we won't even want to live here.
Yes Independent- observer. It is smoke and mirrors in my opinion.
Our population has grown by 390,000 people in the last 5 years. If put into one place that would be NZs 3rd largest city. A city with no houses, no schools, no infrastructure.
Worst case scenereo the tax payer has to provide for these people. In reality some of them have needed skills and some are characters like Dot Com who have a lot of wealth.
Winston wants immigration at 10,000 so that we can pick and choose our immigrants.
At 70,000 a year we are damaging our economy, our lifestyle, and our environment. We are damaging the very reasons why immigrants and tourists want to come here.
Like everyone else on here dollar -bill I am sharing my personal opinion.
Yes I am wealthy. But if you visited me you would think I was a peasant.
I grow much of my food, I recycle my waste, I live in an unpermited shack, I have alternative electricity, my shack looks out over the ocean, I kill thousands of rats and possums, I drink water from a spring and wild pigs root up my garden.
Unfortunately to live my lifestyle it seems you have to be wealthy on paper and you need investments generating cashflow to pay the rates and other expenses.
lets face it new zealanders you are going to be a sweden, a finland, a social caring society of big government... its that simple.. vision? its not the governments job to take visionary risk or is the market not allowed to do this for the government... bigger spending for health and education? Its nice , its good, but it not visionary unless visionary is good social care and maybe civilization is these things... and you thought i was just monetary policy,,, its up to you new zealand... you decide what you want but dont be surprised if you taxes go up and you at 15% GST now so its taxing your family holiday bach next...
Sweden and Finland both have advanced, well functioning manufacturing sectors. So does Japan. All 3 countries have relatively high taxes and excellent healthcare and education (up to tertiary level where they're also required to shell out for their tuition).
In comparison, NZ does not have an advanced, well functioning manufacturing sector. We have an efficient raw commodities sector that produces high volumes, but struggles to adapt to new realities and has limited profitability because of low value add.
That is a key difference.
I'm a fan of taxing economists and lecturers. This tax should be called a Lecton Tax.
The rate of this Lecton Tax would be set at $100,000 per annum per economist and lecturer!
I think this tax would create a tremendous incentive not to have economists and lecturers sitting around and full potential could be reached as investment into productive enterprises would be encouraged. Overall better use of brain capacity utilisation as Lecton would disincentivise the option value of waiting for others to develop value added products.
As you can see this kind of tax can be modified to include other areas where non-production occurs. An example would be a Burat Tax.This would be targeted specificall at bureaucrats. I would envisage this Burat tax should be set on a sliding scale from the highest to the lowest paid......this tax would be the full amount of all earnings after income and other taxes have been deducted.
What about Land Tax
Before election question should be What about Finance Minister
https://thespinoff.co.nz/politics/06-09-2017/the-critical-questions-rai…
May be question to be asked What About National and their dirty campaign
https://thespinoff.co.nz/politics/06-09-2017/the-art-of-prime-ministeri…
Who reads their twaddle? Well according to their own site. "Right now, every left-leaning, media-savvy, university-educated hipster you know (and probably their baby boomer parents) are reading the The Spinoff. The website is the rising star of New Zealand journalism: smart and stylish, the toast of Twitter, hitting the strong, provocative and often feminist notes readers would appear to lap up"
Vote for no change.
Herald are reporting differently.
Since the media stand-up, Ardern has clarified her position, telling Radio New Zealand that while the working group can consider a land tax, the family home and land it sits on will be exempt.
Any recommendation for a land tax that affected the family home would not be implemented by Labour, Ardern said.
Firstly and I don't know why somebody else doesn't say this. We already have a land tax in the form of Local Government Rates. Any new land tax will be on top of this.
Land tax may seem fair but already many struggle, or cannot afford to pay the Local Rates.
If Land Tax is going to reduce land values by 17% it will have huge flow on effects to Consumption and Investment in general and Aggregate Demand. This is simple Economics AD = C + I + G + ( X - M).
Land Tax - Dumb idea
Council Rates are not a Land Tax. They are a charge for services provided and allocated according to an arbitrary computer program associated with property sales, to raise the amount of funds a Council deems necessary to service the area. They could equally be charged on the basis of the number of cars per property, but the basis of sales transactions ( notice how CV changes at transaction time) is convenient.
(Proof: If property prices halve, do you think rates will too?)
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