Prosper Australia

photo credit: D.Reichardt

Regarding NZ’s Buckley Tax Review, Promises and Costs of a Land Tax :

On the one hand, a land tax would induce farmers to make the best possible use of their land, since the tax would be levied regardless of whether the land was in production. But on the downside, this could encourage over-use – since fields lying fallow would still be being taxed – and would probably result in the elimination of much of the remaining native bush on which some of our endangered birdlife still depend.

The over-farming issue is a common misnomer. Farmers live in areas with a lower per acre land value than in a central location of any city. They will have a tax advantage over city slickers with higher land values and therefore land taxes.

The key is that the land is valued yearly. This must be done. Farming land will then be worth more in good crop seasons and less in years of drought. This reduces the need to over-use land.

With the overall tax burden revenue neutral but yet city people paying more of the mix, farmers can afford to let their fields re-generate.

With less incentive for farmers to sub-divide their property on the edge of towns (because Land Tax reduces the speculative windfall), this policy can help ensure they use their land for productive purposes. This reduces the need to cull any more old growth forestry.

With humanity’s survival in the balance, the importance of carbon sinks will rapidly evolve in the very near future. This will provide an additional incentive to the Land Tax system in valuing the earth and in effect re-balancing the playing field back to a de-centralised model.

To ensure the policy is effective as possible, the local municipal rating should be moved off improvements and onto land only. Why penalise capital investment?

New Zealand is known as one of the world’s leading gimp nations when it comes to protecting the future that land in prime locations avails. They have no Land Tax. They have pathetically low council rates. Worse, these are set to penalise home construction such that the family home pays upwards of 30% more than the land banking speculator.

The kiwis haven’t even got a capital gains tax (not that we endorse that but at least the public could some share of the gains).

The gate is right open for foreign investors – no limits on foreign investments. Look at what the propertied elite say here and here.

The result – some of the most unaffordable property in the world.

Essentially they have given the big thumbs up to hammock surfing speculators and corporate REIT raiders to buy up their most valuable sites and hoard them until they can hock them for a fortune.

It really is flabbergasting.

Especially when they have been earmarked as one of the only habitable land masses in about 50 years.

But it seems that some are awakening to this giant ‘kick me’ sign the kiwi’s have given themselves with their lax tax policy. A ‘once-in-a-generation’ type Tax Review (similar to the Henry Review) has just given their findings.

Read this post highlighting some key presentations from kiwi tax experts. The slide shows are of interest, particularly the fallacies in Shaw’s (check the list of exemptions).

Arthur Grimes gives a more balanced view.

But listen to Geoff Nightingale from Price Waterhouse Coopers. Some effective lines on the justice and equity front that give one some hope that the kiwi’s are looking at deep seated reform. It seems the Tax Working Group has seen beyond the lure of a Capital Gains Tax that penalises turnover in favour of the more effective Land Tax.

However, the NZ Treasurer Bill English put a stop to the hopes of future generations with:

“Changes that are widely understood and are supported make the most difference to economic performance. Those sorts of changes tend to stick.

“Those without support simply don’t last and can’t make that much difference to our economic performance.”

At least yet another Tax Review has come out in our favour. Some good articles are out in the open and being discussed.

One day the masses will awaken to the invisible chains that high mortgages place on them due to poor tax policy.