- Date published:
7:11 am, April 28th, 2016 - 76 comments
Categories: capital gains, capitalism, class war, housing, john key, tax - Tags: auckland, duncan garner, fran o'sullivan, housing, housing crisis, land tax
Concern over Auckland housing has reached critical mass, with many on social media expressing support for Duncan Garner’s strongly worded piece yesterday:
Suburb-cleansing: Working poor evicted from their backyards
If you want to know what’s wrong with Auckland’s housing market, then Otara is a poster-child for failure. Auckland’s ‘working poor’ – the hard working, taxpaying, minimum wage cleaners and factory workers – can no longer afford to live in the working class suburbs set-up to house them.
It’s a bloody disgrace and it’s wrong, wrong, wrong and wrong. We need to rally against this.
We don’t need any more proof that action is needed fast. Not tomorrow. Yesterday.
Investors are running amok. In Otara 80% of sales recently went to investors. These people are struggling to be tenants in their own backyards. They will be feeling powerless no matter how hard they work.
The working poor are being what I now call, ‘suburb-cleansed’ – they’re being pushed further and further away from the schools and factories their kids attend and their parents work in.
This is not the fair country I call home.
Key’s land tax is not going to cut it. Gareth Morgan is very convincing on the problems:
A land tax just for foreigners? Come on John, you’re better than this
John Key has floated the idea of an annual land tax on foreign buyers of residential real estate as one response to the influx of money into the Auckland market particularly.
Land tax is part of one of the biggest holes in our income tax regime so in principle I agree. For years now I’ve advocated taxing all effective income from capital. Currently New Zealand doesn’t do this and it’s an insult to fairness.
However, the prime minister is looking at a land tax only rather than a tax on effective income from all capital – and he’s only looking to tax foreigners. That’s the sort of tax incoherence that Muldoon championed and the Rogernomics revolution got rid of, so I can’t agree with him, just as respectable economists couldn’t agree with Muldoon’s livestock incentive scheme or his crazy wage and price freezes. Arbitrary and selective reactionary taxation is the epitome of policy naivety. One would have hoped John Key wouldn’t take us back into that black hole.
So the PM is looking at a land tax for foreigners. If that were to eventuate, I smell an even greater profit opportunity personally than just accumulating empty houses. To become the go-between that the Chinese or other foreigners needing to effectively own more and more of New Zealand’s housing stock looks enticing. I’d simply use a blind trust or nominee company to do the buying for them – for a small share of the capital gain of course. And if that were too hard, I’d raise funds in China to establish a company to do the same.
Think again, think less reactively and try to think beyond pleasing just the property-owning class that always vote National.
Likewise Fran O’Sullivan:
Weak measures solve nothing
John Key’s calculated punt to threaten land taxes on foreign investors won’t solve the Auckland housing crisis.
It will play well among National’s voting heartland. But it will not make home ownership more affordable for the many young New Zealanders who are finding it difficult to even get on to the Auckland housing ladder.
If he really wanted to bring the galloping market to a halt and house prices to a more sustainable long-term level, he would take note of the findings of a tax working group in 2010.
The group estimated that a 1 per cent tax on all land – not just land owned by non-residents – would immediately cut the value of land by 17 per cent.So why isn’t Key even going to look at whacking domestic investors?
O’Sullivan goes on to list measures that can be taken (including capital gains tax), as does Isaac Davison in this useful piece.
Labour is promising, according to this report, “a ‘tidal wave’ of big housing reforms the country had not seen since [former Labour Prime Minister] Michael Joseph Savage time”.
This is one of the major issues for the 2017 election. Key is going to have to do more.