Our blog on Taxing the Mega-Rich for their Kiwi Hideaways galvanised two reactions from readers – one xenophobic a la the Winston Peters followers, and one enlightened.
The enlightened folk recognise that foreign investment, tourism and immigration can all be hugely beneficial to New Zealanders if we’re smart enough to take advantage of the opportunities (i.e. by taxing them).
Winston’s lot would rather close the shutters, hide away in their little corner of the world, and watch the world go by while they’re atrophying.
Instead of turning foreigners away, milk them
As discussed in that blog, foreign ownership of land should result in tax revenue from the foreign landowners, so long as we had an income tax regime without loopholes.
As long as they are paying their share, there should be no problem with them owning their slice of paradise, just as we welcome foreign investment in businesses that contribute to the tax take.
But let’s extend the argument to some of the other interactions foreigners have with our economy and assess what other revenue we can garner from that – at least to cover the costs we incur, if not make a profit.
Sting them for insurance costs
Tourists visit to enjoy our national parks and use our highways and accommodation facilities.
They also cause more than their share of road accidents, and trigger expensive rescue operations in our mountains.
The cost of all these should at least be recovered – as is common overseas – rather than ACC and other taxpayer-funded agencies bearing the cost.
Where they are not, it is nothing less than a taxpayer subsidy of our private sector who do make profit from these visitors. The method is easy – make them buy insurance at the airport.
And entry fees
But we could and should go even further.
This season the Great Walks are enjoying record numbers of tourists.
Again these are taxpayer-funded facilities so why shouldn’t the taxpayer get a direct return on that investment, at least to cover the track maintenance?
We already charge for hut beds so clearly are not allergic to the user-pays ethos, but extending this to foreigners having the right to use of National Parks again seems a no-brainer.
Again that levy could be collected at the airport as part of a bundled “taxpayer-provided services levy”.
And it shouldn’t stop here.
In instances where there are direct charges for the services provided by central- or local-government funded or part-funded amenities, we could simply have a separate and higher charge for foreigners. Zoos for example could levy that – at Darjeeling zoo, foreigners pay 2.5 times the entrance fee that locals do.
We already do this at the Waitangi Treaty Grounds, presumably because there is value in New Zealanders visiting this historical site.
Why not extend this approach to other sites – such as Te Papa, Zealandia, and the plethora of other Zoos and Museums that receive taxpayer and ratepayer subsidies?
Transition to a clean and clever economy
If New Zealand is going to transition from dumb and dirty economic growth (wherein the extractive industries are subsidised by being able to pollute with impunity) to clean and clever growth (where industries that do not do this no longer as taxpayers, have to subsidise those that do) – then we have to get smart about our interface with the world economy.
There is enormous scope to make New Zealand a more and more attractive destination for tourists and especially, immigrants.
This is the whole rationale for me putting my support behind Predator Free New Zealand – because it will make our country a place talented people want to visit and live.
But the investments in our environment need to get the return that validates such a strategy. And that means ending the subsidies to dumb and dirty as well as ensuring it’s not just the taxpayers who are funding environmental improvement.
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This article was first published on his blog, Gareth's World. It is here with permission.
19 Comments
I don't really think Gareth Morgan is stupid or ignorant. The suggestion for imposing taxation is well worth considering, and imposing an significant stamp duty for foreigners is for example of part of how Singapore has addressed the Chinese problem.
But it does irritate me greatly that he dismisses the concerns of many people in the country and an entire political party as "xenophobic". The young people of Auckland have been well and truely shafted and the government policy on foreign "investment" and immigration is a big part of why.
If the housing, the construction industry, and infrastructure are not up to the task of handling the influx without adversely affecting New Zealanders then restrictions should be in place until they are. It is not xenophobic, it is what a responsible government would do.
However it seems like the modulus operandi of this government is to ensure that the retirement age is kept unchanged, that payments into the NZSF are suspended, and that an enormous asset bubble is stoked for just long enough for the boomer generation to cash out into the sunset.
We are dependent on tourists spending money here, so why should we drive them away to other destinations by levying higher fees, etc ?
The suggestion that the visitors should pay for their own healthcare, including in the case of accidents through travel insurane has much merit. It should be a condition of entry.
As regards taxing investment differently for foreigners, there are merits and demerits. We will needs a separate administrative mechanism for that. For example, how would you differentiate and tax houses or income from houses owned by non-residents or those who do not have residence permits ? And how would you tax businesses owned by foreigners differently ? What about farms ? Will require much thinking and work to implement. May be a one time fat fee and annual maintainence fees would be an easier way to go ?
Whats a beer cost you in tourist Rome?
A room for a tourist in Hong Kong?
Entry charge to a bar/nightclub in Korea or Thailand?
Visit to Buddhidt temple?
Check point stop in South African nations, or Egypt?
Ferry price in Indonesia?
do you think the taxpayers of those countries are subsidising tourist dollars?
or Disneyland - any subsidy?
Try this for a comparison
If you ever travel to Australia for a short holiday make sure you have travel insurance
If you intend a longer stay make sure you subscribe to an ambulance service
If you dont and get injured you will get slugged
Here are the ambulance fees in Victoria
Ambulance road service Metropolitan areas $1115
Road service in Regional and Rural areas $1,645
If you are seriouslyt injured in a road accident and require Air Ambulance transport try these
Fixed Wing Plane Air Service $1,977
Helicopter Transport Service $9,946
Fixed Wing services usually involve road service to and from the airfield at both ends
See fees schedule here and gasp
http://www.health.vic.gov.au/ambulance/fees.htm
Read the fine print at the bottom - all quoted fees are exclusive of but subject to GST
That is just the ambulance transport fees without the medical and hospital fees
From reports seen over the last two months many of the accidents involving tourists in New Zealand have involved multiple victims and patients receiving helicopter transport - all for free on ACC?
Good suggestions, all a them.
When yez realise that many, many buisinesses are set up now for differential pricing (members, walk-ins, VIP's, discounts based on cards held, on turnover, on status achieved), to say nothing of segmenting (same core product, different packaging, different pricing, different market segments), then it's a small step indeed to differentiating Them from Us and charging accordingly.
Oh, but that's private sector speak.
My bad.
Gubmint rarely has the systems, the economic nous, the market smarts, the staff, the incentives, to do much of this.
Sigh.
Gareth,
"The enlightened folk recognise that foreign investment, tourism and immigration can all be hugely beneficial to New Zealanders if we’re smart enough to take advantage of the opportunities"
These are more bodies when the true wealth of NZ its its limited resources and hence true wealth is a) per capita and b) inter-generational.
On top of that the world is going with us being post-peak oil change drastically. "useless rich ppl we dont need" ie in order to get some worthless 1s and 0s we allow them the position and power to lorde over us in the future.
More like taking the 30 pieces of silver.
a fruit fly is a fruit fly, what ever the fee they pay the orange gets wrecked..
“For an individual estate agency, regular business with any high-net-worth individual can be very lucrative for the company and, therefore, there can be a lack of incentive to report of suspicions,” Maxwell said. “A similar risk arises in small practices in the legal and accountancy sector.”
blessed are the service providers
The extraordinary measure has shocked prestige agents who had believed the purchase did not require approval from the Foreign Investment Review Board because the purchase was in the name of an Australian company.
Per capita GDP from tourism is pretty low, and wages are not so flash either. I like Winny P you can count on him to aggravate the status quo. That being said I agree that its a great idea to make sure immigrats pay at least the full costs of their stay, and an entry and exit fee is the easiest way to do this.
We Kiwis are quite dumb , we dont recognise Chinese and Indian drivers licenses held by migrants who come to live here , but we allow toursits from these countries a free rein on our roads.
Its lunacy .
Some of these toursits can't even read the Western Alphabet and we just open the door and let them run wild on the roads in hire cars .
Some of them are in their teens , and even young Kiwis would have more restrictions on the roads than the tourist folk from Asia
Accidents are the inevitable outcome , followed by hand wringing and angst on our part.
And what have we done about it ?
Bugger all
Tourists need to be tested at the port of entry and issued with a NZ driving permit if they want to drive here, quite simple .
Hell if the dysfunctional administration in Cook Islands can make us get a local drivers licence when we go there , why cant we do it here ?
"one xenophobic a la the Winston Peters followers"
Lets name call all those we disagree with especially if we cannot answer their questions.
Lets solve all the worlds problems with tax because that is what you seem to be constantly advocating.
Tax this to solve this problem, dont tax that to solve that problem. Sounds like a short sighted economist.
Hot-Dog. More hot-money coming Aucklands way
The Australian Property police arise from their 10 year slumber
If they can't buy established property in Australia any more, guess where they will go?
This is a shot across the bows
How to lose $3 million or $4 million or more on one property - all in one hit - PDQ
Buyer of $39 million Sydney mansion directed to sell within 90 days
Forced sale - and won't get his $2,000,000 stamp duty back either
As a dual-citizen of both NZ and Canada and having been raised between both countries, the NZ tourism debate is of particular interest to me.
While I think Mr Morgans article has some excellent points which also sparked some interesting suggestions (adding an extra box to the rental car agreement forms to charge a predetermined ACC Levy to nonresidents for example), I do feel that he/we may gain more leverage to achieve a more positive outcome by focussing more on what seems to be the core issue; which is to reassess how we should be subsidising public sevices and facilites like National Parks and emergency services, enjoyed by both residents and nonresidents alike.
I certainly feel that some of the potential leverage in an otherwise interesting debate is lost when sentances like "milk the foreigner" and "sting them for insurance costs" are used.
I think we could get a far better outcome by getting away from the Us & Them mentality and move more toward a collaborative sustainable approach on how best to pay for the services we all know and love about NZ.
Aside from the financial input (second largest export sector behind dairy, according to tourismnewzealand.com) the tourism sector is also an integral part of the culture of NZ; both tourists visiting NZ and New Zealanders themselves visiting other parts of the world.
We mustn't forget that kiwi's are world renowned as travellers, or "tourists", to the point where there is even an acronym that all kiwi's grow up with, that I personally have not come across anywhere else in the world..."O.E".
Remember that there are 1 million NZ'ers living outside of NZ at any one time...one fifth of the entire population.
We must also remember that as well as being an increasingly expensive place to live in, New Zealand is also a very expensive place to travel as Dr Eric Crampton mentioned in his article in response to Gareth Morgans post;
http://www.interest.co.nz/opinion/74397/eric-crampton-says-explicit-gov…
.
I am currently living in BC Canada, and while we try to get back to NZ once a year, it is tough to financially reconcile when for the price of the airfare alone, we could be holidaying all expenses paid for 2 weeks in several locations in this Northern hemisphere.
I have admired some of Gareth Morgans previous articles on financial matters and even chose to invest my funds in him when he started the Kiwisaver Super, and have also followed his and his wife's stories on motorcycle adventures abroad, so was therefore a little shocked at the disrespectful and flippant tone towards travellers that he of all people adopted in his latest article.
So to recap: while I wholeheartedly agree with adopting user-pays systems and agree that the issue Mr Morgan pointed out is well worth looking into; I would however recommend a more respectful approach when speaking about "tourists" .
These are people making the considerable effort of crossing to the other side of the world, wanting to explore and spend their hard earned cash in a country that is increasingly expensive to live and travel in. The least we can do as fellow travellers, is to acknowledge that effort with a little more respect in return.
Regards,
Beth Christianos
You currently get financial gain from Canada. And are concerned about the cost of travelling a third of the way around the world and across the equator to visit NZ.
Many New Zealanders, especially those who get wages outside of Auckland, barely have the take home pay to travel inside their own island, or go as far as the other islands in New Zealand. Only half can afford time and expense to enjoy those tax paid walks.
It's nice that you are concerned but you've highlighted the problem. Foreigners can currently travel around the world to enjoy services that many people who live here can't afford (but support with their taxes). That's poverty tourism, not what we want in NZ at all.
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