The Government is considering a land tax on offshore purchases of residential property.
Prime Minister John Key said the tax could be introduced if new data showed offshore buyers were pushing up New Zealand’s house prices. It would be the most effective response because it could be adjusted for conditions, he said.
The tax would capture New Zealanders living overseas, though expats could possibly get an exemption for three years.
A tax working group recommended a land tax in 2009, but it was not adopted at the time. The working group wanted the tax to apply to all property owners, not just offshore buyers. It estimated that a 1 per cent tax on the value of land would lead to an immediate fall in land value of 17 per cent, making housing more affordable.
A land tax huh? Very 19th century. It sometimes feels to me like Key and English realise they’ve done a pretty shitty job at modernising our economy so they’ve set up freebie policies for the subsequent left-wing government. There’s the capital gains tax on property sales within two years, which can be kicked up to ten years, and now it looks like there will be a land tax for foreign owners, which can easily be adapted to a land tax on undeveloped properties in urban areas (land banks), or even single owner occupier properties in suburbs like, say, Remuera, to encourage the development of apartment buildings.