NZ mulls land bankers’ tax

By in New Zealand Economy

| 16 comments

By Leith van Onselen

New Zealand’s Tax Working Group (TWG) – an 11-member group chaired by former Labour Finance Minister Michael Cullen – has delivered its final report, which recommends creating a local government tax on vacant residential land in a bid to stop land banking. From Interest.co.nz:

The Tax Working Group (TWG) is recommending a new tax on vacant residential land in a bid to crack down on land banking.

And the TWG says in its final report such a tax would be best levied by councils as a local tax.

The report recommends the Productivity Commission, which has been carrying out an inquiry into the financing and funding of local government, considers the feasibility of such a tax. The commission is expected to release its findings in November.

Englobo landowners have every incentive to withhold land from use and drive up its price. Taxing vacant land would obviously discourage such land banking, bringing homes to market earlier, boosting supply, and lowering home prices.

Hopefully, the NZ Government follows through with reform.

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Leith van Onselen
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Comments

    • david collyer

      Thanks for the citation, Freddy.

      The NSW Land Tax Act is a mess. Reform is urgently needed. Wonder why the NSW government is perpetually broke? Here it is.

      DBN!

      • Freddy

        I would like to see a land tax on farmland that is tax deductible. e.g. You pay $100k in land taxes, and your farm has a tax free threshold equivalent to the land tax amount. If your farm is unprofitable or you profit shift then you still pay the land tax.

        Some discretion for genuinely low profit farms, drought, etc.

  5. kiwikarynMEMBER

    You’re joking right? You expect the Council that is responsible for the endless delays in achieving building and resource management consents to be the one who implements the tax? It is the Councils that are responsible for the fact that it takes years and years to get approval to build on a block of land, if they are rewarded for delaying approvals even longer by getting revenue for it, that’s what they will do.

    Secondly, the cost of any land tax will simply be added to the cost of the section and passed on to the homeowner, making housing even more expensive.

    • david collyer

      “the cost of any land tax will simply be added to the cost of the section and passed on”

      Really? I have a pile of 2″ hose lengths you might like to buy and I won’t be beaten on price!

      • kiwikarynMEMBER

        The building industry is run like a cartel here in NZ. Which is why building costs are 30% higher than in Australia. They wont miss an opportunity to load more costs on to the mug punter, who thanks to still lax lending standards, will simply borrow them from the bank.

    • Jacob

      building costs are 30% higher than in Australia.

      Land goes up in price – not bricks.

      the cost of any land tax will simply be added to the cost of the section and passed on to the homeowner, making housing even more expensive.

      Land tax is awesome – homeless men living under a bridge pay no land tax. Should have a mansion tax as well – New York state has a mansion tax that raises U$400 million per year.

  6. Jacob

    Should certainly put a land tax on foreigners. They can not vote anyway.

    And ban them from buying apartments smaller than 50 sqm.

  7. Hugh Pavletich

    NZ Housing &n Urban Development Minister Phil Twyford in Parliament Tuesday …

    https://www.parliament.nz/en/pb/hansard-debates/rhr/document/HansS_20190219_052050000/7-question-no-7-housing-and-urban-development

    Oral Questions — Questions to Ministers
    Question No. 7—Housing and Urban Development
    7. Hon JUDITH COLLINS (National—Papakura) to the Minister of Housing and Urban Development: Does he remain committed to all of the housing and urban development policies outlined in the Speech from the Throne? … read more via hyperlink above …
    .
    .
    … and the just updated Performance Urban Planning http://www.PerformanceUrbanPlanning.org
    .
    .
    We are in for a wild year !