The Herald reports:
In a dramatic shift in position, John Key is threatening to apply a land tax to foreign-based house buyers if there is evidence they are pushing up New Zealand house prices – and it could apply to Kiwis abroad.
I think a land tax on all land owners is a good idea economically. However only if other taxes are reduced so that NZers are not taxed more overall.
The evidence on foreign buyers could be just two weeks away.
A land tax to dampen demand by foreign-based buyers would be a complete flip in the Government’s insistence that overseas speculation has not been a problem in the heated property market, and a switch from its focus on increasing supply.
The Prime Minister told the Herald any land tax could also apply to Kiwis abroad with property in New Zealand after an exemption period of perhaps three years away.
But such an exemption could potentially contravene New Zealand tax treaties with other countries.
If it did, the tax would apply at the same time to all foreign-based buyers who are tax residents elsewhere, including Kiwis abroad.
“Subject to our capacity to do so, New Zealanders living abroad would be exempt but you could do it for a period of three years at which point if they retained the property, they might have to start paying [the tax].”
Quite a novel approach – actually gather evidence to see how big a problem there is, and then decide based on the evidence.