Closing Tax Loopholes and the housing crisis in New Zealand- TOP

It is not very often that you get agreement among three such disparate groups as unions, banks, and academics, but that is what is happening as all three call for a tax on property.


ANZ senior economist Phil Borkin lamented on Morning Report this morning that the recent budget had not done enough to encourage domestic savings rates. The Reserve Bank’s financial stability report out yesterday acknowledged that domestic deposits are not high enough to meet demand for credit, and therefore banks face higher costs of borrowing from overseas to meet the shortfall. This will place upward pressure on mortgage rates. The Reserve Bank analysis showed that increases in interests rates on savings account would not make enough of a difference to close the shortfall. Mr Borkin stated that a tax on property was needed to be more proactive at raising savings rates: “when you look at the perceived advantages of housing over other forms of investment that’s certainly something that we think will have to be looked at more closely.”

Over the weekend Council of Trade Unions economist Bill Rosenberg called for the introduction of a wealth tax on The Nation, saying: “We also think we could raise some funds from taxing wealth in some ways, such as a capital gains tax or some form of asset tax.”

Earlier last week the PSA union hosted a forum of experts to discuss the future of tax policy in New Zealand. Many of those panellists identified the lack of a wealth tax as a serious problem in the New Zealand tax system.

At the end of the panel, the expert guests were asked what their number one priority was for changes to the New Zealand tax system. Max Rashbrooke, a research associate at the Institute for Governance and Policy Studies said: “Some kind of tax on wealth, any kind of tax on wealth.” Senior Lecturer on tax at Victoria University Dr Lisa Marriott called for a “tax on wealth with the aim of addressing inequality.”

It is interesting to note that discussing a tax on property is so taboo in New Zealand that ANZ senior economist Phil Borkin didn’t even say the words aloud, instead skirting around the issue and merely implying the change.

At The Opportunities Party (TOP) we are not afraid to discuss the issue head on. We need a tax on property in New Zealand. We have the largest tax loophole around property of any OECD country. We also have the worst housing crisis in any OECD country. These two things are not a coincidence.

Introducing a new tax always makes people nervous. Our plan is to follow the process used in introducing GST during the 1980s where income tax rates were cut prior to GST being introduced. This eased the impact of the transition. All revenue raised from taxing property wealth would be returned via a reduction in income tax rates. This means that while the family home will be included in the capital tax, 80% of Kiwis will end up better off.

TOP’s Fair Tax Solution will improve household savings rates which will reduce the risks to our banking sector from overseas shocks and ease upward pressure on mortgage rates. It will redistribute the tax burden from our low-wage earners to wealthy property owners reducing the inequality that threatens the fabric of our democracy. It will ease the housing crisis as demand to own property purely as a tax haven declines. It will encourage more houses to be built as land bankers are forced to develop due to the increased costs of owning empty land.

The many different ways that TOP’s Fair Tax Solution will benefit New Zealand explains why such diverse groups are on board with our proposals.

For more on our Fair Tax Solution please go to

For further comment please contact:

Dr Jenny Condie, [email protected], 021 0269 7818

Tax Spokesperson for The Opportunities Party



Showing 36 reactions

  • Richard McGrath
    commented 2017-06-15 11:11:08 +1200
    Unions and academics are hardly a disparate group, as both are riddled with statists of the socialist persuasion. Banks, with some notable exceptions such as BB&T, are well known for taking taxpayer money when it suits them, thereby ruling them out as ‘capitalists’ in any meaningful sense of the word.
  • Richard Wiig
    commented 2017-06-15 06:58:19 +1200
    Zak: “There is definitely too much government interference and regulation, but deregulating everything would lead to alot of chaos.”

    If that was the case, then the black market economy would be nothing but chaos. It isn’t chaos. It is quite ordered, but there is no one to go to when it comes to disputes. The libertarian approach doesn’t mean zero regulation. It means regulation through common law courts on the basis of property rights that sets precedence. It would deal with long drops with flies all over the place, which is very easily rectified, and other property rights issues that might not be so easily rectified.

    Your other scenarios are just not real, such as corporatiosn buying up all the land and just sitting on it. What reason would they have for doing this? Land is valued for its best use, and if it’s best use is for farming a particular crop which is economically desirable at the time, why would someone voluntarily deny themselves that economic benefit? It just doesn’t make sense.

    Zak: “what is government for, what is it supposed to achieve?”

    The protection of your rights, and only the protection of your rights. Its purpose is not to dictate to you in any way whatsoever.

    Zak: "Personally I think we need to start all reasoning from the point of view that all citizens are part owners of the nation and we have to find a way of sharing that part ownership in a practical way. "

    That is a very collectivist view that places government as the sovereign entity and citizens as its subjects. In reality (and there is solid philosophy that shows it) it is the individual who is sovereign. Governments are instituted by and derive their power only from individuals. To turn and act against those individuals is an act of tyranny. That in most cases it might be soft tyranny such as TOP’s tax scheme, doesn’t make it any the less of a tyranny. People don’t need TOP’s tax policies in order to achieve affordable housing. They need to be free from meddlers.
  • zak
    commented 2017-06-14 11:51:06 +1200
    There is definitely too much government interference and regulation, but deregulating everything would lead to alot of chaos. There’s a fine line. I’m for a Libertarian approach whenever possible. Anarchy (no rulers not no rules) would only work with civilized rational people and we are a long way from that, so its a nice idea in theory but in practice would mean a return to the dark ages and might is right.

    No government would mean the guy living next door to you in suburbia could have stincky long drop with flies all over the place. One positive side it would mean we could use land for anything, without restriction and could for instance buy farmland and build on it and live on it any way we wanted.

    If there were no taxes on land at all, corporations, or foreign governments would just buy up all the land they could and just sit on it and do nothing with it if they wanted. How would you like the Saudis buying up all the available farmland in New Zealand, shipping in their people for study to residency programs and in no time you’d have the Islamic state (which is the same as Saudi style Islam) fully established in New Zealand.

    Arguing for no government at all makes no sense. Clearly we need government, but we want absolute minimum government. So the first question to ask is “what is government for, what is it supposed to achieve?” Personally I think we need to start all reasoning from the point of view that all citizens are part owners of the nation and we have to find a way of sharing that part ownership in a practical way. There is no shortage of land or resources in this country, just a lack of creative thinking on how to structure things so that resources are shared and everyone gets a good start.

    Some of you keep arguing for government to stay out of it. With our current laws that would mean the richest most powerful individuals, corporations and nations just buy up New Zealand’s assets. I think we need to check back at some basic Maori principles of common ownership and use those on a higher turn of the spiral.
  • Richard McGrath
    commented 2017-06-14 11:32:11 +1200
    Richard Wiig is absolutely right. The solution for any perceived housing problems in NZ is not new regulation and taxation, but the government stepping aside, deregulating and allowing developers and entrepreneurs to build houses that New Zealanders can afford (not the $500k ‘affordable’ housing trotted out by politicians who are completely out of touch), and if anything abolishing taxation on rental income so that ordinary Kiwis can become landlords and have some security in their retirement. The only ‘fair’ tax system is one that taxes everybody the same – preferably at a 0% flat rate. I’m just wondering whether TOP would start taxing people who built more than one ‘tiny home’ (small home on wheels) or owned more than one car (potential taxi fleet), remembering that the power to tax is the power to destroy.
  • Rhys Goodwin
    commented 2017-06-14 07:50:09 +1200
    Hey Richard, interesting idea. Although that would mean less tax for those right at the top too. This policy really is about making the tax system more fair by closing a single (but significant) loophole. It’s just one part of the solution for housing. A huge amount of research has gone into this policy and while it doesn’t appear particularly palatable on the face of it, once I dug into the evidence and research it really made a lot of sense to me.

    The reason I got behind TOP was they are the only party who seem to be bringing bold, forward-thinking polices, not perfect and I don’t agree with 100% of every policy but overall I think we could have a real positive impact on NZ and that’s all I’m interested in (I’ve never been enthusiastic about politics before this!).

    Anyway I hope you’ll take a good look at the material and give it some genuine consideration because we need more critical thinkers like you involved to get this thing moving.

    Btw, totally agree with your point about red tape preventing people living the lifestyle they want e.g. alternative/innovative housing. You’d think councils would have better things to do with their time! :(

  • Richard Wiig
    commented 2017-06-13 22:14:18 +1200
    Make the first 50,000 earned tax free then, if that is your intention. I don’t believe that is your intention. Your intention is to be everyone’s saviour when it comes to houses, which makes it more about you than them.

    “The intention is to make things better for low income earners”
  • Richard Wiig
    commented 2017-06-13 22:06:17 +1200
    Zak, my approach is not to provide houses for anyone. That isn’t my job and legitimate job of any politician or political party. People can provide for their own housing if they live under the condition that allow them to. I would provide the conditions fast, not the houses fast. A good example is a couple near Motueka who built themselves a Yurt that they were happy to have as a housing option. The local council pulled it down because it violate some regulation and took them to court. That is just a small example of the obstacles in peoples way. Remove the obstacles and then people to sort out their own solutions. A major obstacle is the artificially low interest rates set by the Reserve Bank. Ever decreasing interest rates has made it profitable for investors to purchase houses and gain not only from rent, but the capital gains that are a consequence of the money that pours in.

    The TOP policy doesn’t remove obstacles. It just rearranges the deckchairs on the Titanic.
  • Rhys Goodwin
    commented 2017-06-12 21:24:01 +1200
    Richard that would certainly be an issue but The Opportunities Party has done the research and the math that shows only the top 20% wealthiest will pay more tax under policy 1. The intention is to make things better for low income earners not to sting them the implementation would follow that ethos. Of course no system can be perfectly fair but this about closing a gaping hole which is having real negative impacts on our economy and on people.
  • zak
    commented 2017-06-12 21:23:01 +1200
    Richard, so to try to nail this down. How would you create the circumstances for house builders to build enough houses (fast) so that the price of homes (including the land they are built on) falls to sensible levels, because right now there is a shortage and they cost too much. This is mainly what TOP’s housing policy and this whole discussion is about. I don’t think we can get everything right with no regulation. I’m definitely not into taxing people’s first home even if they are “getting it back”, it should never be taxed in the first place.

    “Zak, I would remove the RMA and put regulation back into the hands of common law courts. Any regulation that stops people doing what they want with their property where it doesn’t violate anyone else rights should simply be removed.”
  • Richard Wiig
    commented 2017-06-12 20:48:28 +1200
    Tax policy is never fair. It is, by the very nature of what it is, an injustice.

    “There are plenty of others that need to be closed to make tax policy fair.”
  • Richard Wiig
    commented 2017-06-12 20:47:14 +1200
    Alistair. When someone owns a house and they rent it out the rent rightfully belongs to them. It doesn’t belong to government. Whether or not someone can pay their rent is beside the point. The point is the burden that taxing property places on property owners who might struggle to pay that extortion with menaces. The argument is made that their income tax is reduced, but that means little if their income isn’t sufficient in the first place.
  • Richard Wiig
    commented 2017-06-12 20:40:49 +1200
    Zak, I would remove the RMA and put regulation back into the hands of common law courts. Any regulation that stops people doing what they want with their property where it doesn’t violate anyone else rights should simply be removed.

    When you say that most central planning screws things up, what you mean is that most does, but yours doesn’t. Well, that is what they all think.
  • zak
    commented 2017-06-12 00:18:53 +1200
    Alistair Newbould, there are many was of thinking about these things. I prefer to approach housing from the angle of making life easier for the citizens of New Zealand. Lets take a quick look at how we approach housing right now. Banks create money, almost totally out of thin air and loan it to people (at interest) in the form of a mortgage that takes on average about 25 years to pay off with people often working all day 5 days a week. Does this sound like a sensible approach for making people’s lives happy and enjoyable? The average house takes about a year to build which is mostly labour and materials. The land is an additional cost and not cheap. Why is it that with a land mass of the United Kingdom but a fraction of the population building land costs so much. The average small building plot where I live cost around $500,000. But considering New Zealand has a plethora of land even $100,000 is too much for a building plot. I think the cost of building land needs a solution.

    Now on top of the ridiculous costs of land and building a home TOP’s is suggesting taxing the actual property as a fixed asset. People are already taxed on their first property with the interest they are paying and the fact it takes them 25 years to pay off the mortgage. So I definitely don’t support the idea of taxing anyone each year for their first property. To stop people from using property as an investment vehicle rather than a home it may be worth taxing them on their second and third properties and any thereafter. But as a previous commentator suggested, there may be better ways of solving the shortage of homes in New Zealand. We don’t need to make life harder for hard working ordinary people by taxing them on their fixed assets, we need to make it easier and cheaper for building land and homes to be made available.

    In summary then, I think we need to think about how to get more properties built faster so we have a surplus not a shortage. That’s the most important thing. Secondly, to stop people hoarding properties and not letting them (which takes the property out of circulation) I do think we could tax people on any property beyond their first. For instance, where I live, 9 out of 10 properties are vacant for 11 months of the year, but if we taxed people 10% per year they would probably sell them and the price would go down. This would mean that no one who owns a holiday property by the ocean would vote for TOP’s. I wonder what percentage of Kiwis own property in a holiday resort?
  • Alistair Newbould
    commented 2017-06-11 23:08:38 +1200
    Richard, a house is a house is a house, and if you don’t pay the rent on a rented house, you will be kicked out, and if you don’t pay your taxes, the government will garner your wages until it is paid, so I guess, if you don’t pay your taxes on your house one or other of those options is available to the taxman. Tax only works (or would only work) if everyone pays their fair share. This policy will close one loophole. There are plenty of others that need to be closed to make tax policy fair.
  • zak
    commented 2017-06-11 22:01:28 +1200
    Richard, how would you remove the obstacles in the way of allowing the market to meet demand?
    I agree with you that most central planning screws things up and doesn’t work, but I don’t think that’s always the case.
  • Richard Wiig
    commented 2017-06-11 21:56:26 +1200
    Zak, the shortage isn’t because there are too many buyers, or because people purchase more than one house. There is a shortage because of all the obstacles in the way of meeting supply. The problem is a lack of freedom to meet the demand (which you allude to yourself with your comment about freeing up land) not that there is too much demand. If demand is high, then capitalists, if they are free to, will line up to meet it. That, and only that, is what brings prices down. Not people who’ve deemed themselves to be the all seeing eye of the market. Central planning has never worked, ever. It has always failed dismally. The problems that you see and that you are trying to rectify are the consequences of central planning. To try fix them with more central planning is like trying to fix a disease by piling on more disease.
  • zak
    commented 2017-06-11 20:53:03 +1200
    Hi Richard, TOP’S want’s to tax property. I think its a debatable proposal with risks that the state is interfering too much and I’m against taxing the first property, but there does need to be a way to make it unattractive to own more than one property because there is a shortage that the market seems to be unable to fill at an affordable rate. Companies avoid building volume that would deflate their profit margins, so we cannot leave it up to the free market to produce enough homes to keep the prices down.

    To take your example of people owning more of an item using the example of cars. If people want to buy several cars, the price could be cheaper because of economies of scale, the more that are produced the cheaper they can be made. It doesn’t seem to work that way with houses and the market charges what they can get away with charging. Plus there is the added demand for property as an investment vehicle that isn’t taxed unlike money in the bank or earnings.
  • Richard Wiig
    commented 2017-06-11 20:46:39 +1200
    Well they won’t reap all the capital gain (assuming there is any capital gain) because you’ll have dipped your hands in and taken a cut, but anyway, you still haven’t adequately answered my question. You say older people won’t have to pay the tax until their house is sold (and it might never be sold) which suggests that younger people will have to pay the tax regardless of whether or not their house is sold. It will require income. If the income is not sufficient to pay, what happens then? You can’t just make a blanket statement that their tax on income will have reduced. It means nothing if income is not adequate.
  • Richard Wiig
    commented 2017-06-11 20:37:59 +1200
    Zak, you make the assumption that incentivising individuals to own only one property is what leads to the cheapest housing outcome, but I see no reason why housing should be different to any other product that is produced in the market. There are many products that are actually cheaper because some people own more than others, and precisely because they own more than others. You are stepping into the role of the central planner, and central planning has well and truly discredited itself in practice for long enough now for all the world to see.
  • zak
    commented 2017-06-11 20:35:53 +1200
    Hi Rhys, I think its important to minimize government interference at all times. My logic here is that there is no need for a property tax on the first property but there is on the 2nd or 3rd or 4th, so government should not be taxing the first property, but its ok to tax the 2nd or 3rd because its depriving others of the opportunity to purchase and driving prices up. Also, if people don’t understand the policy they simply won’t vote for it. Policies need to be as simple and straightforward as possible.

    Another interesting policy I noticed in the UK put forward was to factory build loads of easily affordable homes at a cost of around 100,00 pounds, but they could only be sold back to the government so they could not be used as an investment vehicle. So they would be privately owned but used only for living in and could not be sold on the open market. I think that’s a really good idea. Enough of these homes could be built to keep the housing market all over New Zealand at a stable level. Obviously none of these policies would work unless there was a real slow down on immigration, because immigrants create more demand which so far means less supply which = higher prices.
  • Rhys Goodwin
    commented 2017-06-11 20:25:31 +1200
    Hey Zak, good stuff. I guess in a way the policy will have an effect similar to what you suggest in that, I as someone who owns a single home will be unaffected by the policy. My income tax will go down my property tax will go up. Situation neutral. I guess there is a number of ways it could work but something needs to be done.
  • zak
    commented 2017-06-11 20:18:16 +1200
    Hi Rhys,
    If we create massive supply with factory built homes, we could easily stop people buying them up, by having a high yearly tax on more than one property, not on the first property. So rather than taxing everyone with a property, just make it financially unattractive to own more than one property. I think you’d find it would depress prices, stop people using property as an investment vehicle and get support from most of the public.

    I think your immigration policy makes very good sense. However to maintain sensible policies and stop them being changed by new governments I think we need to move to a new political system of referendums on most issues. I think the New Zealand people are intelligent enough to make that move. I believe most people would vote for your immigration policy. I think the age of 2 party politics should be over. Both parties tend to have policies that most people want and an equal number of policies people don’t want so the public are always forced to compromise.
  • Rhys Goodwin
    commented 2017-06-11 20:10:02 +1200
    Hi Richard, people will be able to afford it because the income tax rate will be decreased. And as I understand it for elderly they can settle the bill when the house is sold. I.e when they (or their children) reap all the capital gain. Point is, housing is a tax free investment vehicle and this should not be.
  • Richard Wiig
    commented 2017-06-11 20:06:48 +1200
    Stuart Ward, there is a simple and easy way to make 100% of people better off. Remove the burden of Government from their backs.
  • Richard Wiig
    commented 2017-06-11 20:01:00 +1200
    A house is a house is a house. What is a house worth, and what if someone can’t afford to pay the tax on their house? Will you kick them out of their house?
  • Rhys Goodwin
    commented 2017-06-10 08:55:28 +1200
    Hey Zak, I know what you mean about it being a bit complicated, it took me a while to get my head around it. And you’re right supply is an issue and we need to build more.

    Love your ideas around innovative housing systems, definitely the kind of stuff we need.

    The thing is we’ve got two groups of people who will gobble up that supply as it gets built, those who are in genuine need of a place to live and those with spare cash looking for a tax free investment vehicle.

    Wealth can be represented as cash in the bank, investments in business, or investments in housing. If you receive interest from cash in the bank or a dividend from a business investment you are required to pay tax. In the case of housing there is a tax loophole of ~11bn.

    This gets to your point about the government needing to make the system more fair so we don’t have what we have now, house prices increasing at insane rates and the gap between rich and poor widening.

    With regards to immigration, have a looksee at the TOP immigration policy it sounds like you’ll more or less agree with it.

    TOP has some real vision, something I’m not seeing from any other parties who all seem happy to tinker around not addressing the hard issues.

    Even if the polices aren’t 100% what you had in mind, do consider TOP for your vote, and see who else you can rope in, there’s a real chance here to be part of a movement that can actually make a real difference.

  • Chris Mitchell
    commented 2017-06-09 23:17:40 +1200
    Oops This Policy makes a lot of sense to me.
  • Chris Mitchell
    commented 2017-06-09 23:16:28 +1200
    This picy makes a lot of sense to me.
  • zak
    commented 2017-06-09 23:13:11 +1200
    Rhys Goodwin, I think your policy sounds too complicated so people won’t understand it and if they don’t understand it, they won’t vote for it. Another thing is that taxing property is way too much government interference. The state needs to stay out of things as much as possible and only get involved to keep things fair and increase the quality of life of citizens. Much of this is simply about supply and demand. We have much more demand than we do supply = shortage sot he price has become ridiculous, so we need government intervention to correct that without interfering too much. We need policies that make lots of property available to normal average people so they can get on with their lives without having to work decades to pay for a roof over their heads.

    I like the idea of
    1) Release an oversupply of housing plots and lifestyle blocks which would push prices down.
    2) Produce large numbers of ready made homes that can be dropped on site and hooked up in a couple of days. They could come with rain water collection and tanks and solar panels so they’d be totally off grid and up and running within a day or two of being dropped on site.
    3) Make it illegal for non residents to buy property in New Zealand.
    4) Zero percent interest on your first home. Zero or 1%, something that encourages people to own their own home and discourages people to own more than one.
    5) Total halt on all immigration into New Zealand until everyone who wants to own a home is housed with the above policies. We keep to this until everyone is homed. If we need slaves for the kiwifruit production or meat and milk production we give them temporary work permits.
    6) Pay people to have kids. White kids are not breeding because of financial instability and endless sexist liability. With the new homes I have suggested above the state could pay off 25% of the home loan for each child. So if a couple have 4 kids, 100% of the home loan is payed off. I believe Adolf Hitler did this in Germany. Kids are our future, so lets make it attractive for people to have them. We have plenty of immigrants already, lets take care of everyone we have.

    Without drastic policies to solve the housing issue once and for all with massive home production nothing will change and there will never be enough builders to build enough homes because the shortage is too big and we keep bringing in 2% of the population each year.

    All of this is doable.
  • Rhys Goodwin
    commented 2017-06-09 22:29:31 +1200
    The thing is Zac, if you only have one home you’ll probably either end up paying the same or less tax overall under this policy because it’s given back in income tax cuts. If you’re in the top 20% richest, you will likely pay more overall, especially if you use a lot of (currently) tax free investment vehicles I.e. Houses.