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 www.top.org.nz/top1.
For further comment please contact:
Dr Jenny Condie, [email protected], 021 0269 7818
Tax Spokesperson for The Opportunities Party