"Some experts have declared that it is necessary to tax
the people until it hurts. I disagree with these sadists."
~ Ludwig Von Mises, from his essay ‘Defense, Controls, and Inflation’
For a Prime Minisister elected on a platform of “no new taxes,” your ever-popular leader has been very good at discovering new ways to steal from you:
- GST increase from 12.5% to 15%
- GST on items purchased online from overseas
- Capital gains tax on houses sold after owning for less than two years
- Increased taxes on KiwiSaver
- The 2012 ‘Paperboy’ tax
- Civil Aviation Authority fees increase
- Additional fuel tax increase of 9 cents with annual CPI increases locked in for perpetuity
- Road User Charges increased
- Massive ACC levy increases
- New online company filing fees
- Creeping expansion of the scope of Fringe Benefit Taxes; and, most recently
- the so-called "Netflix tax" on services, media or software purchased from an overseas online retailer.
He’s now suggesting another way to put the grey ones’s hands in your pockets: a land tax on non-NZers and NZers living overseas. A land tax said to be around ten percent of the land’s value, payable every year. A land tax payable by owners out of their income on the value of their asset. A tax that will undoubtedly require a whole new army of assessors to value these ever-rising assets. A tax imposed on land owners as a xenophobic political sop instead of acknowledging the government policies that have made land in NZ far, far too expensive.
A land tax that would see many folk having to find around $100,000 every year or face the consequences -- to pay for the consequences of the very government policies that made their purchase more expensive!.
The argument for it? There may be “evidence,” says Mr Flip Flop that foreigners are “pushing up” New Zealand house prices.
First thing to say: not one land tax anywhere in the world has stopped house-price inflation or any of the housing bubbles in any foreign jurisdiction anywhere. Not in Britain, not in Ireland, not in Australia, not in Singapore, and certainly not in the US. So there’s that, i.e., no empirical evidence whatsoever.
Second: this is a highly progressive tax, in that the heaviest burden would tend to fall on the wealthiest. Yet progressive taxes are something Key’s Blue Team are supposed to be against. Key’s reason for suggesting it however is simply his same old tactic of requiring his supporters to swallow dead rats to ‘head off’ the Red Team, the tactic meaning the Blue Team instead implements everything the Red Team would do anyway. So much for reasons to support Key’s Blue Team.
Third, this must of necessity be a tax on land both productive and unproductive ( to make too many exclusions simply invites loopholes), so much of the cost will fall on land that is agricultural, or industrial, or that is maybe being prepared for subdivision or waiting for rezoning or consent so it may be prepared for subdivision. Adding more cost simply adds another cost to the already rocketing costs of producing sellable land.
Fourth, a tax of ten percent on land value is (in round figures) represents esentially a 100 percent tax on rent that land might be earning. or even more in some cases. This would make the real capital value to the owners fall to approximately zero – so this new Key Tax would not just be a discouragement to these owners to own rental land, but a complete and total disincentive.
Fifth, it is argued that the tax would discourage foreign “speculators.” Yet what is a speculator but someone waiting for a profitable opportunity that has not yet arisen. Speculation itself does not raise land prices—speculators simply take advantage of the dislocations in the market that are causing those price rises. It would be better to remove those dislocations – such as the Metropolitan Urban Limit that arbitrarily makes some land inside the Limit worth up to ten times more than the equivalent land just outside—if their were a Government with the courage to do so. But there is not.
Sixth, the reasons for rapidly-rising house prices are hardly a mystery, and hardly the fault of foreigners – and the money they do bring in to pay for their houses and their upkeep is real money that local tradesmen live on and local vendors can and do invest productively.
As we recited here the other day, the reasons for rapicly-rising house-price inflation are easily put. There are three::
- money became too cheap
- planning rules became too numerous, and
- it’s in the interests of the political elite to keep them that way.
Much has been written about the second and third. But just consider how cheap is the first.
The money used to buy houses is mostly borrowed. The way our system of money is organised, it is essentially debt organised into currency. Your Reserve Bank oversees the creation of this new money (new debt) that is being borrowed into existence – currently at the rate of around $3.8 billion of new debt/money every year – that’s a rate of money/detb creation of between 8-13% per year.
And you’ll never guess where most of that new borrowing/new money goes: more than two-thirds of it ploughed directly into the already over-inflated housing market. Every year.
It’s a bit f’ing weak to blame foreigners for that.
Because to blame them for anything is frankly just a political sop. A bit of xeonophobic misdirection to get a new tax on the books.
But rest assured that like rust, the taxman never sleeps. Every new tax starts with a single foot slipped quietly in the door like this one would be. First it’s one size ten inside your door, then two, and next thing you have a whole freaking home invasion. If this first step comes off, expect land taxes on everybody within this decade, and a fully-fledged wealth tax on everything soon thereafter.
Which will help no-one at all except the grey ones themselves.
This is precisely the sort of thing those parasites feed off.