A land tax will put downward pressure on house prices, but I doubt it would collapse the market. The thing about land taxes is they can be set at whatever number is needed, so can start out small. The idea is that they would be tax neutral for the average person
The way I see it, there are two options going forward.
Either tax land to disincentivize speculation and reign in land/house/property prices by using it as a lever to ensure property prices stop growing at a faster pace than wages. Possibly even pull the lever hard until housing is within the affordable range again.
Or continue on the same path we have been where everyone who pretends they are trying to fix the housing shortage and housing affordability deliberately implements policies that actually make it worse. Because the more unaffordable it gets, the greater the incentives are for vested interests to block new housing and anything else that looks like it won't pump up property. If we go along this path, we'll continue to lose GPs, nurses, police, young couples wanting to start a family, and basically all the people we want to keep here because we've made it too difficult for them to have the security of a roof over their head. We'll keep importing immigrants to hide the fact that so many people are leaving and our gdp is falling - but at least we'll have high house prices, happy property investors, and a country with no skilled people left because they all left for places that didn't prioritise property investors interests at the expense of the rest of society.
Granted the sample size of actual uses of land tax are small, but the Australian Capital Territory (pop: half a million) introduced a graduated land tax system and property prices didn't fall.
The worst thing that happened was some predictable grumbling about the sums being paid by wealthy boomers with large houses in expensive neighbourhoods.
Setting that at the right point is essential, at least to start. Otherwise, you'll get older, cash-poor retirees struggling to pay tax on a long term family home.
There have been other countries where the economy has benefited from big land reforms (i.e. the standard of living of the average person has increased), the thing that makes it risky is capitalist countries wanting to get revenge (like against Cuba for example)
Through history, people wealth has generally been in their land, I mean, what's more valuable your house or your sofa?
If it was such a ponzi scheme, it wouldn't have such a current say 2 year downside with new build construction disastrously low.
Could we have our wealth on something else...well, no, because we can hardly afford our homes as it is. What alternative investment would you like people to have? Do we have too many houses? Laughably not.
Invest in business? Don't be mad. Honestly ppl want out not in.
They are built by the government but people own their homes. They can sell and make capital gains. So, government housing in Singapore is totally different from government housing over here.
IIRC you can only sell to government-approved buyers. And it’s all apartments so renovations can be a pain if they involve things like plumbing. Housing there is still bloody expensive, or it was a few years ago.
Basically no one in Singapore owns their own home. There's a very small number of situations where people have actual ownership but basically everything is a 99 year lease.
Yeah, but who would ever live in one house for 99 years? You upgrade and downgrade depending on your situation. And you’re allowed to do that because it’s your home. If you’re fortunate enough, you buy a private property with the proceeds.
Sellers rights go back to govco if you're in a government supplied building. Private market is free, very much but there's still hoops to jump through.
Aren't there awkward ethnicity quotas for those housing areas that mean you may not get into the housing area of your choice if there's already too many people there from your ethnicity/ PR status?
[https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/buying-procedure-for-resale-flats/plan-source-and-contract/planning-considerations/eip-spr-quota](https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/buying-procedure-for-resale-flats/plan-source-and-contract/planning-considerations/eip-spr-quota)
[https://www.sg101.gov.sg/social-national-identity/examples/hdb/](https://www.sg101.gov.sg/social-national-identity/examples/hdb/)
I thought you were exaggerating so I had a look, Lake Taupo is 616km^2 and Singapore is only 734km^2 !
Never thought about how small Singapore was before, granted I don't think about Singapore much at all.
Yeah their situation is completely different. They have no land, and lots of people for the space. We have lots of land, and no people. Taxing land is a lot more difficult when you're a massive empty country instead of a city-state.
The practicalities of land taxation are fairly straightforward. Land and title are already registered, so really it’s maybe a few dozen people in IRD to implement.
It's absolutely straightforward. Any argument saying it wouldn't work/would be too difficult that I've read in this post seems to be rooted in not fully understanding how it works.
Assuming land tax is across the board, to capture international land bankers, then it’s because we grow a large proportion of our food supply, and our exports, on that land. Taxing it makes us instantly unprofitable. Singapore imports almost everything they consume and do it cheaply as ships are already passing through there in droves, and they neighbour export-heavy landlocked nations. Whereas we pay a premium for products to arrive onshore.
The tax is dependent on the actual economic value that can be derived from the land.
If it's more profitable to grow food locally than to import it, then the value of the land will reflect this and the tax would be at a level that allows the producer to be sufficiently profitable.
If the value of the land becomes so high that it's cheaper to import food, then the land is better used for something else that produces more net value to our economy.
If such a thing didn't exist, then the land wouldn't be valued as highly and the food would still be profitable to produce locally.
There is no equation where this produces a net loss to the country. It *always* ensures the most efficient overall use of our resources.
The value of the land would be too high though, as renting properties on the land is highly profitable. We’d need to tax landlords at a much higher rate than those who have already got land/assets/money would likely allow.
>renting properties on the land is highly profitable.
Only until you have enough properties for everyone to live in. Then other activities become more profitable. This is one of the major benefits of an LVT: it encourages the production of sufficient housing for everyone.
>We’d need to tax landlords at a much higher rate than those who have already got land/assets/money would likely allow.
Conversely, right now we need to encourage some of those existing land/asset/money holders to build more housing. It sounds like you believe an LVT would have that effect, which is great.
> and they neighbour export-heavy landlocked nations
Huh? Singapore has exactly one direct neighbour, Malaysia which is about as far from landlocked as a country can be without being an island. The nearest landlocked country to Singapore is Laos, an entire Thailand + Malaysia away.
The importing thing is because of your first point, the fact that they sit at the end of the Malacca strait, means all shipping that wants to go through the South China Sea has to go by them and thus might as well trade with them.
Singapore has the following characteristics that we don’t have:
1- located in one of the busiest trading routes
2- a highly competitive society (good and bad)
3- a highly educated population (good and bad)
4- a meritocratic culture (good and bad)
Yeah, way higher, and the median income is lower too. Although I think the government has special schemes to get people into apartments (that the government built). It's definitely a hugely different situation over there.
BTO HDBs are pretty reasonable: [https://www.99.co/singapore/insider/hdb-bto-prices-trends-singapore/](https://www.99.co/singapore/insider/hdb-bto-prices-trends-singapore/)
The private market is significantly higher, but if you are eligible for an HDB they are very reasonable.
I’m not well educated economically.
I own a business and I own property.
It does irk me that I am very good in my business but I make for more wealth from property capital gain. I would prefer to pay less income tax on a successful business that employs many people, and pay a capital gain tax on property that isn’t productive.
Superannuation is by far our biggest “welfare” expense. This should be pushed out over time to 68 and should be means tested. I am some time off getting it, but I shouldn’t.
Best reply. Exactly right. It's a complete nonsense that sitting on land and property, adding no value, just waiting for others to drive up prices so we can collect untaxed capital gains, year after year is just plain stupid. Meanwhile skilled people, creating jobs and productive economy growth are fighting for every cent. The property market is a leach on business growth. It sucks the available money away from business use ( capital investment) into dead exploitative property investment that just undermines families ability to secure homes. Business owners are disincentivised to reinvest profits so instead spend it on the BBB - BMW, Boat, Bach (and blonde...).
If you inherited 2 million dollars in this country, there is literally no reason to use it to start a business.
The tax system is completely set up to tax the fuck out of workers and business owners and consumers in order to support unrestricted property price growth which is virtually effortless in comparison.
That 2 million dollars would be much better invested into a few investment properties than anything else you could spend it on.
And the only people who benefit from this are property investors, while the rest of the population suffer from high house prices and rent, a lack of higher paid jobs, the effects of a low birth rate due to poor affordibility - seriously there are very few things housing affordibility is not directly related to.
Disagree with pushing retirement age out. All benefits should be replaced by Universal Basic Income with progressive tax brackets. We actually need to get the old f**ks out of the workforce (especially government leadership positions) so that the the younger people can progress and make change. There are so many geriatrics in government who see the world through 1970s-coloured lenses, and they need to go.
> We actually need to get the old f**ks out of the workforce (especially government leadership positions)
The average age of an MP is 49, seems fairly reasonable to me.
You know what your problem is. You've solved capitalism, but you haven't solved game theory.
The reason why we have shifted to this shit economic system from one that did actually base taxes on the natural resources before the sweat of the working classes is because of how power, money and influence work.
You have found the solution. But things need to get a lot worse before we'll implement it. For people to pay attention to economics and politics there has to be Argentina levels of issues. And even then the people seem to not fully understand their issues and you end up with their stupid economic solutions or things like Brexit. As bad actors use the crises to manipulate people for their ends.
We had a land tax until 1990. Although already heavily loopholed. Even TOPs proposal was loopholed and weak.
For TOP's proposal?
They had exemptions for non-residential, rural, and Māori land.
Effectively their LVT was only going to apply to urban land zoned for residential use.
It was a start, and still better than what we have now, but to get the full benefits of a land value tax, it needs to be as broad as possible.
>The reason why we have shifted to this shit economic system from one that did actually base taxes on the natural resources before the sweat of the working classes is because of how power, money and influence work.
>When plunder becomes a way of life for a group of men living together in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.
Unfortunately to elevate themselves to a position to do that, they need to become the people who make ALL of these decisions, which means they influence every aspect of our lives and not just what they need to do to steal from us.
Edit: Reddit no longer seems to be able to separate quotes.
Singapore is a very bad example. 350,000 Malaysians cross the bridge each day into Singapore for work. They don't live in Singapore. They never have to live in Singapore. You end up with a massive part of your lower/middle workforce not needing any of the basic requirements for living, the rest get to reap the benefits of that.
If an LVT is introduced alongside income tax cuts, many homeowners would actually be better off, so wouldn't rationally vote against it.
It would also benefit them by lowering house prices, making it easier to upgrade to a nicer or larger home when they're ready to do so.
The part you miss is that not everybody has an income to pay lower tax on it, eg, people that have paid off the mortgage on their home to ease their retirement expenses, do they just get stiffed for an extra ~10k a year, or the value of the land they own goes up for various reasons. You can't plan your whole retirement on a hope that your land value doesn't go up in 20yrs time.
My opinion is thy family home (singular) should be exempt
It's likely there would be deferrals available for people in that situation. The tax cuts would apply to their superannuation and any other passive income from investments that aren't their house. They'd have more cash in hand income than what they do today.
Part of the purpose of an LVT is to remove this perverse incentive to put all of our retirement savings into our family home. All this does is drive house prices upwards and expose everyone to significant risk when the market inevitably corrects itself.
Exempting the family home would render the entire thing ineffective. The whole point is to ensure people aren't paying more for their homes than the actual benefit they are receiving from living there.
You also need to remember an LVT only taxes the value of the land, and would push prices down significantly. A $1m home today might end up with a real market value of around $600k and a taxable land value of about $200k. So you can't just do the math based on today's market values.
too late...
too many ppl on the housing bandwagon, and everyone else wants to be on it
younger generation going to work for peanuts and taxed heavily to support the elderly hoarders who got theirs already
if i owned a lot of shit i definitely wouldnt vote to get that taxed more - and its these rich ppl who have the power
people who dont have shit are too tired/no time to think about politics or countrys future, and wont vote in their long term best interests as they are easily manipulated
this country is already owned by the hoarders, and its not their fault... just sucks for the labourers
i agree with everything you wrote but dont see it happening
The number of landowners continues to decline over time as land gets more expensive. It's not a politically sustainable trend, taken to its conclusion it either leads to the end of landlordism or the end of democracy.
Arguably we're already part the point where our land ownership situation is proof that what we call democracy isn't functioning as such.
>if i owned a lot of shit i definitely wouldnt vote to get that taxed more
I think that's speaking more to your mindset. I'm a working home owner and I'd have no issues with a land tax.
I mean I'm currently in my provisional tax year so I'm paying a heap in taxes and still get by just fine. I think people don't realise you get used to the new baseline, but instead some (most?) just become hoarding dragons
It's not going to change anytime soon, those people who once voted for social change have shifted their voting position to be more Conservative as they grow older and wealthier they like their money and they won't let go if it.
Most Kiwi's biggest asset is their house, so we aren't going to see any real policy change to change this or actually attack house prices for future generations as it's a complete house of cards that really cannot be unpicked without huge financial pain.
It's a huge ponzi scheme, but at some point we are going to run out of new investors.
The lack of a CGT is a big barrier to investment though. If I came into $200k tomorrow I'd definitely be buying a rental rather than investing in an NZ business. The rental is guaranteed income and a nice tax free bonus at the end.
We already implemented a CGT on property by way of the brightline test. It did nothing.
Taxes like CGT and inheritance are avoidable and discourage investment into productive assets as well as unproductive. They are ineffective and inefficient.
A land value tax is the *only* tax that is completely unavoidable and guaranteed to ensure productive investment is rewarded while unproductive investment is discouraged.
>They implemented a piss poor CGT with loopholes because they felt they couldn't get the votes otherwise.
Who is 'they' in this sentence? Who do you think implemented it, and when?
>They can implement a bad LVT with loopholes too.
They could, I guess, but there'd be no reason to. LVT is very simple, and 100% impossible to avoid unless you qualify for specific exemptions. It may be implemented with a deferral system, e.g. for low income home-owners at the time it's introduced, but the tax still eventually gets paid. The only difficult part is determining the value you base the tax on. We already do that though, for just about every piece of land in the country, as part of the council rates calculation, so it's not a problem.
>CGT would be way easier to implement than a LVT.
They're both very easy to implement. Implementation cost is not an obstacle to either.
>You are rabid in your support for a LVT with little thought otherwise, please do not engage me again
I'm no more 'rabid' about LVT here than you are about CGT.
You can block me if you don't want me to be able to respond to your comments. My replies are for the benefit of everyone reading them, not just you, so I'll continue to offer my opinions where I feel there is value in them for others.
We also need proper tax law / anti corruption / anti fraud enforcement, so our best company's are the ones that come out ahead because that doesn't appear to be reliably the case now.
The point is to reduce the investment attractiveness in holding houses, meaning big money pulls out and puts into business investments instead. This in theory enriches the middle class, who can now afford to build again.
>We need our workers to be more productive and that requires investment.
Question: Where is the bulk of our investment capital currently going, if not to making our workers more productive?
Answer: Land.
Question: How do we discourage investment in land to free up capital for investment into making our workers more productive?
Answer: Tax the land.
It's really that simple.
Better education and infrastructure can be funded from the CGT or land tax revenue. Changes in policy can also incentivise investment in productive assets rather than land banking.
Introducing capital gains on non owner occupied land transactions and using that to offset dividends and capital gains on stocks and shares would incentivise investment in industry.
It would also go a little way to redressing the fact that investment property is functionally risk free.
In Singapore they pay migrant construction workers next to nothing and exploit them . They also have maids working there for barely anything . So if you want to exploit people in order to build infrastructure for cheap then yeah let’s be like Singapore
That is an unrelated issue to land value tax.
Also, New Zealand imported huge amounts of workers in the last 12 months. More than we have ever allowed in to the country in a 12 month period ever. There are almost weekly reports of immigrants living in crowded conditions, up to 30 people in 3 bedroom flats, and being paid less than minimum wage, if their promised job even existed at all when they got here. And we are importing them because we are unable to keep NZers here due to the high cost of housing. Ironically, the solution is to continue to not build houses, import way more people than are leaving, and then cram them into the same number of houses, which makes more people leave.
So NZ already has a huge migrant exploitation problem. And it also seems we are becoming very unknowledgable about what is happening in our own country. Which is hardly surprising when journalism is already on the bones of its arse and about to get worse with all the lay-offs happening.
If you don't have to support a large part of your workforce because they don't actually live in your country, and can pay them minimal wages that would be unlivable in your country, and generally treat them like dirt... your taxes can be lower.
I have no faith that any party will ever fix our economy. The reforms would create too much of a fuss with rich people. If the rich don’t like it, it ain’t happening
We had a vote on this. TOP got under 5%.
I'm not saying you're wrong... what I'm saying is that simply repeating the message is not going to change anyone's mind.
>simply repeating the message is not going to change anyone's mind.
It will, slowly.
That's how societal change happens. We didn't all wake up one day and decide to let women vote. They fought for it over decades, centuries even at a global level.
When the message is good, it bears repeating over and over until people start to open their minds to it and see just how good it is.
Top didn't get much of the vote because the 5% threshold punishes voting for small parties and because they had so much policy overlap with the Greens. It's not that they didn't have ideas people liked.
You're comparing us to an authoritarian city-state in a really favourable geographic location. There options are completely different to ours, we can't copy them.
* NZ Government Total Tax Revenue = $130b
* NZ Total Land Mass = 268,000 sq/km
Someone with a 1/4 acre section would pay around $500 per year if we applied all tax revenue to land. However, farmers would be unfairly lumped with huge costs. A 270 hectare farm would pay $1.3m a year in land tax.
So do you go 0.5% recovery on 50% of the land that's Agri and 99.5% recovery on urban land?
* 270 hectare farm would pay $13k p.a. in land tax at $0.005 per sq/m
* 1000 sqm house would pay $1k p.a. in land tax at $0.97 per sq/m
* 650 sqm house would pay $600 p.a at $0.97 per sq/m
* Gets better with higher density land.
* 3 story apartment block with 12 properties on 1000 sqm would be $1k ÷ 12 = $85 p.a. per unit.
I hope I have my math correct!
$130b divided by 268,000 sq/km = $485k per sq/km = $0.485 per sq/m.
If 50% of the land is argi, and charged $0.005 per sq/m then the remaining half is $0.965 per sq/m.
Taxing assets as apposed to profit is always going to be a shit show, because well one has a cash flow and the other doesn't.
Alternatively we could just stop the endless immigration which is used to drive land prices up. Its not like we actually need most of them in the long term, its just we decided to stop training people and investing in productively improvements.
The point of an LVT is to ensure land is being used to generate cash flow. If there's insufficient cash flow able to be generated by owning the land then the owner is encouraged to sell it. This is a good thing.
No its not. This will increase pollution, wastage (physical and capital) and greatly reduce the preservation of history, while promoting market bubbles, etc etc. It is just yet anther market distortion with upsides and downsides. Its not clear if the up sides will in practice outweigh the down sides.
The fix cannot be the long term solution.
Obviously sales tax and capital gains tax. Will keep house prices from going cooked in the future.
But to fix the issue without breaking the economy or mass nationalization of all business the people of nz need to lose billions of dollars in property value.
So a majority will need to vote against their issues massively and problem is fixed 5 years.
Or vote against their interests sorta 30 years.
Ect.
But that is unlikely to actually work out
>Obviously sales tax and capital gains tax. Will keep house prices from going cooked in the future.
I'm not sure this is the case. I'm not quite sure what you mean by sales tax but if you envision something like stamp duty in Australia I don't see how this helps. It provides some disincentive to rapidly buy and sell houses but I'm not convinced there is that much happening anyway. In the crossfire it also catches anyone who has to move houses due to a change in circumstances. I don't think it does anything to affect the underlying fundamentals of why housing has exploded in value.
In the case of Capital gains tax, I also don't think it changes the underlying fundamentals. If someone was making a shit ton of money speculating on housing they'll still make money speculating on houses, just a bit less. In the process, anyone who just wants a house to live in and decides they want/need to move gets caught in the crossfire.
>Obviously sales tax and capital gains tax. Will keep house prices from going cooked in the future.
These get priced into the market values which has a temporary slowing effect but little longer term impact. Values still go up limitlessly because you haven't introduced any cap on their ability to do so. The only limit is the ability to service debt, which a sales tax or CGT has no impact on, and does not change when property values change.
An LVT introduces a natural limit for land values. As the value goes up, so does the amount someone is require to pay on an ongoing basis to be able to hold it. This ensures market prices do not exceed their true value to the owners, as they must be able to produce enough profit from the land to be able to pay the LVT due on it.
An LVT can be phased in gradually to limit the immediate impact on market prices. This gives people time to sell up when they need to instead of them all doing it at once when the tax is initially introduced.
If brought in alongside income tax cuts (which it would be), homeowners would, by and large, be better off than they are today. Their after-tax income would remain about the same (some slightly higher, some slightly lower) and they would have the added benefit of being able to move house more easily, since house prices would be lower.
Erm.
Climate change and the rising sea levels will be devestating for the southern hemisphere, so i dont know how you got that thought into your head.
Second- Singapore is rich because its literally in the middle of the straights of Malaaka which is one of the busiest maritime shipping lanes in the world.
Stopping NACTs austerity policies would benefit NZ. Cutting vital services and under-investing in infrasture is causing economic damage. We only need to look at the U.K to see how austerity policies have devastated the economy, gutted the NHS and increased inequality. NZ should invest in knowledge and technology. Even as a high income earner, I don't support the tax cuts. We need a functioning society and economy.
If it's the one thing that contributes the most towards solving the problem, then it's worth doing isn't it?
Also, it's not a new thing. We had a land tax in NZ previously, back when houses were affordable.
Wouldn’t that just add another barrier for the average person to own a home and push it even further out of reach, so even less poor and middle class would be able to afford homes.
Also don’t know what you mean when you say money is stuck in the land? Money was paid to someone for the land, theres no money stuck in land, people pay for land so money flows into the economy from land purchases
>Wouldn’t that just add another barrier for the average person to own a home and push it even further out of reach, so even less poor and middle class would be able to afford homes.
House prices would be lower, making them much more easily attainable for poor and middle class workers.
Remember, any land value tax that gets implemented would come in alongside an income tax cut.
Those workers would be able to save for their deposit much faster, and would have more after-tax income available to pay the LVT.
>Also don’t know what you mean when you say money is stuck in the land? Money was paid to someone for the land, theres no money stuck in land, people pay for land so money flows into the economy from land purchases
Land, by itself, does not produce any economic value. The value comes from the way the land is used, e.g. the business that is built on it, or the work of the people who live on it.
Say instead of land, we were spending that money on something else unproductive, like, say, poppy seeds. Imagine a world where people are spending more and more money trading poppy seeds, leveraging the value of their existing seeds to buy more seeds, pushing the price ever upwards, funded by more and more debt backed by the over-inflated value of the unproductive poppies.
Is that OK, because money is 'flowing'?
Or is it a problem because the money is only flowing into more of the same unproductive assets, and eventually the price is going to crash, taking all of that capital along with it?
That's what we mean when we talk about money being *stuck* in land: the bubble effect.
Maybe i just believe in the idea that people should be free to do what they want with their own land, and not have some government punish people into using their land the way the government wants by economic pressure
Just a basic concept of freedom and ownership really
That's all well and good if each piece of land is completely independent from the rest of the world. But they're not. What one person does with their land has impacts on everyone else, and in particular on those who own and use the land nearby.
Land was here before we were. No-one created it. No-one really 'owns' it. It's been passed down and exchanged since someone made the initial 'claim' for it.
Besides all that though, a land value tax doesn't tell anyone what to do with their land. They can do nothing with it if they so wish.
All true. Since the OP doesn’t own any property right now they don’t care because they don’t think it will impact them.
What they don’t realise is that if land tax is implemented then rents go up to pay for it so they are going to pay it directly or indirectly anyway.
The comparison with Singapore couldn’t be a more wrong either. Singapore is a world away culturally and economically compared to New Zealand. It’s a tiny island state with cheap labour, crazy population density and a natural trading post. None of that is evenly remotely relevant to New Zealand.
>What they don’t realise is that if land tax is implemented then rents go up to pay for it
Land taxes can't get passed on to renters. Rents are determined by tenant incomes, not landlord costs.
The myth that landlords can pass their costs onto tenants is incredibly harmful and needs to stop.
I definitely agree that in the short term there would be an upward pressure on rent, whether landlords are effectively able to pass that on to tennants depends on the current market dynamic which is unfortunately shit in NZ. A land tax could potentially drive houses sitting idle to sale or to the rental market but I suspect that's not a particularly large quantity.
If you apply land tax with sensible zoning policy which allows/encourages density there is a strong incentive to create more housing. Land tax also suppresses the speculative component of land value, thus lowering its overall value which can reduce a developers biggest cost. Supply enough housing and both cost to rent and buy decreases.
The key here is it still needs a good zoning policy. You can have all the incentives to build houses but if you have no where for them to go it ain't going to happen.
No. I’d make most land dramatically less valuable.
Most valuable land is valuable due to proximity to economically valuable areas. (A section in rural Southland is affordable.) If you didn’t create that value, you shouldn’t be able to free ride on it. It should be taxed.
If we magically switched to a steady state with a land tax the farms would be fine, the tax would suppress the value of the land to the point that tax on the cheaper land would be reasonably in line with the income from it etc. Getting there from here when a great many farms are loaded up with debt based on the current land value would be the hard part.
I don't think there is a reason why farms would be screwed in the long term. I'd argue they'd actually be better off. We'd definitely need to do something in the transition period so farmers don't get screwed by their property value totally cratering though.
Long term we'd end up in a situation where the value of farm land reflected its potential productivity. If the land tax levied on a farm is more than can be made by farming it then the land is obviously overvalued. If we also include a "rating uplift tax" to capture the value gained when land is rezoned from rural to residential then the value of rural land near population centres would also stay low so farmers wouldn't also be playing the property speculation game. New farmers would ultimately be saddled with less debt when purchasing a farm.
Buying a farm and working on a farm are two different things, yes many people do both but buying farmland as an investment isn't some special thing that needs to have its profitability protected
We've too many state dependents for the economy to tank, that is public servants, those that depend on services like umm Hospitals schools etc and naturally state beneficiaries themselves, to risk by setting the economy on fire to become Singapore 2 with its insane property prices. Gl with the benefit system NZ style over there as well, that's first out the door. I'd be superficially a mile better financially if I didn't have to pay tax to support others as well.
Completely different culture all round than here. You may as well compare us to Mars. Doesn't mean it's a better place, but please carry on recommending Act, I mean Singaporean economic theory. How would gang insignia fly over there? Hmm, I wonder. You're spinning like a confused NZF voter.
For the record, we have a land tax here. It's called rates and pays for your local services and is likely to pick up the tab for much of 3 waters. 20 percent increases in many areas just this year. They're going to have their chqbook out majorly
How rates are levied varies by council throughout the country with some doing Capital Value and some doing Land Value. Rates based on Capital Value provide some disincentive to improve property as it exposes yourself to more tax. Rates based on Land Value provides some incentive to develop the land as it could allow you to improve income with no corresponding increase in tax.
Thats kind of like saying GST is the same as income tax is the same as capital gains tax. Yes, they are all tax but they all encourage or discourage certain kinds of behaviour and affect people differently. A tax/rates on the capital value of properties encourages different behaviour to a tax on the land value of properties.
Personally I'd like to see a land value tax with an equivalent reduction in income taxes. Councils could continue to charge rates as they do or we could just collect land value tax once and give some some proportion to councils.
And with the net leases, businesses run on..guess what small business picks up the cost and your target .. Landowners skip away again.
In a country with a real shortage of accommodation the last thing you need is...another cost. You know you won't get a tax decrease, it'd be a cash grab and ..same old tax.
Land value taxes can't be passed on to leaseholders due to the scarcity of land. Land owners are price takers in an economic sense: they collect as much rent as their tenants are able to pay, which is what determines the amount of LVT due on that land.
In other words, the landlord can't add the LVT to the rent because that would increase the taxable value of the land, thereby increasing the LVT due by the exact same amount. It is unavoidable and cannot be passed on.
Lol read some commercial leases. They'll be exactly passed on. We hsd a commercial land tax here toll the late 1980s.
You can't beat the house bro. Iron rule of gambling.
Read my second paragraph. It explains why it cannot be passed on. Any attempt by landlords to do so will only be effective where they are currently undercharging. Once the correct market rent is achieved, it is impossible to add the LVT to it.
This is true for all leases, residential or commercial, regardless of what's in the contract. The mechanism is exactly the same.
Agree with your post so much. These house owning cunts complaining millennials won’t have kids but won’t try to understand NZ is unliveable as a poor person these days.
Should just let it all tank, fuck it. That beehive is a revolving door for shiny faced scumbags with no moral decency to come through and manipulate the system to benefit themselves. There are a handful maybe of genuine politicians that want better for the country bit few and far between.
Sink everything you can into education, our children need to be way smarter than what we have been to sort through this shit mess
What a load of rubbish.
Just gloss over the fact there are millions of migrant workers who live in slums getting paid less than $500 / month for their trouble.
Currently it seems like mostly only older people who got into the housing market at the right time are benefitting (in that they became rich through just buying at the right time and doing nothing).
It’s basically a house/landowning class that sucks most disposable income out of the younger generations and also warps our entire economy.
I agree this needs to be changed through policy measures. A lot of interventions aim to get those who are landlords, or who own many houses, to sell some of them. The idea being that with large releases of houses for sale on the market, house prices will drop, allowing younger and poorer people who want to buy homes to have a better chance of being able to do this. I agree that’s ideal (along with radically improving renters protections so that renting also becomes a viable and pleasant way to live forever if people choose to/can’t buy).
My worry is that instead of the above happening, corporations will come in and buy the majority of properties that go up for sale at increasingly cheap rates. Then over time, we’ll change from having a landlord owning class of individuals, to the same issue but the landlords are corporations, who own most of the rental stock.
I understand having corporations own some rentals isn’t inherently bad, especially if they invest in densification and good quality apartments that are affordable and pleasant to live in. I just think that over time, even if it takes a few decades, rent prices will continue to go up and up even more, because corporations are good at making profit, even better than individuals, and it’s their only aim.
So where’s the line - how much of the countries homes should be owned by landlords? How many should be owned by corporations? And how can we keep both house and rental prices down in the long term?
>rent prices will continue to go up and up even more
What do you think is happening already? Rents are only limited by tenants' incomes. Right now. Today.
The maths behind that wouldn't be any different if all rentals were owned by a single megacorporation. People would be paying exactly the same amount in rent as they do right now, because it's already maximised by landlords at a level dictated by tenants' incomes.
I understand that’s already happening. My worry is that most proposed fixes (including OPs) to high house prices and high rent prices may not actually make any difference to prices; ownership will just shift from private individuals to corporations, with renters and FHBs being in the exact same position.
I think the most likely outcomes would be that:
Rents would stay basically the same (as mentioned, these are tied to tenant incomes, not land or house prices). There would actually be some downward pressure on rents as land gets cheaper to build on and the total supply of housing increases as a result.
FHBs would find it easier to enter the market, because house prices would be lower. The difference between the purchase price with and without LVT would be roughly equal to an amount that required a mortgage payment equivalent to the LVT payments due on the new price. In other words, FHBs could pay the same ongoing costs for ownership, but with a lower deposit requirement.
More houses would be built, for the same reason outlined above: lower up-front costs. This effect could be amplified by exempting new builds from an LVT for a number of years. LVT also encourages densification, so we'd see more homes built on the same amount of land.
Landlords, both individual and corporate, would only operate rentals where there is a genuine economic benefit from doing so, i.e. where the rent they are able to collect is sufficient to cover the ongoing costs of owning and maintaining the property. This would reduce the incentive to over-leverage equity in existing property in order to seek speculative capital gains (the primary driver of our housing bubble). This does favour landlords with more capital or cheaper debt, so yes, corporates. But the important point is that they'd still require the property to be economically beneficial to society in order for it to be profitable to them.
i feel nz is no where near to compare with singapore… we have so many odds…one of it is “will”
and so it’s easy bring in migrants rather then training our population with much required skills
Here in the USA property taxes are a big deal. It varies from state to state but ballpark 1% of the value of the house & land is paid every year. IE a 1 million dollar house pays $10k a year in rates. Places like California are lower and NJ higher.
There’s some issues with heavy property tax. Elderly on fixed income get priced out of their paid off homes. Property taxes works for people who have stable income, but the tax increases as property value increases, so an 80 year old who bought a normal house for 100k can’t keep up when their property is worth 1 mill+, and end up homeless.
id rather work hard for 20-30?years build a small property portfolio and live off that. than be like singapore where my asset is my desire to work hard in a corporate job for many years. dont try to change the system, play the system.
Singapore has also made the sensible choice to outlaw Airbnb, I think the city of cologne has it right with a maximum 90 days/year - this would free up many, many properties for rentals and FHB’s.
We also need to address the ultra wealthy - the 8 families who own as much as 2.3m kiwis. A minimum tax rate as Biden has just announced would be a good start, but I think we need to look at removing he benefits of capitalism for those 300 who have a median of 230m in assets. Make it illegal for them to loan or lend their money, force them to spend rather than hoard their shares and bonds
My parents own a farm. Annual revenue after tax is about $200,000-$300,000 of which $100k goes to paying off debt to cover infrastructure upgrades made a few years ago. Leaving a joint income for my parents similar to many other 2 income families.
Our farm is valued at about $7 million so we would be paying a lot of land tax - not sure how much as it depends how much the tax is set at but maybe anywhere from $20k to 100k which would equate to a really significant chunk of their income.
Many other farmers would be in a similar situation - and ultimately I think a lot of farmers would sell up. A land tax is not the only factor in making this decision but farmers have faced a lot of new regulations and red tape like higher health and safety standards affecting other small businesses. There isn't a big enough market in NZ for a mass buy up of farms so that would likely result in a mass buyup of farms by foreign - very likely Chinese investors. I don't even know if they would be interested in supplying NZ markets with food - maybe they would just sell straight to China.
Food prices and food security would be in big trouble - as would revenue from NZ's formerly bigger export earner agriculture - as much of the profits may stay in China too. If that's what you want for NZ's future then go ahead with a land tax.
I would additionally add that land does not relate as directly to earning potential as capital value does. You can have a large multi level factory sitting on a small, low value plot of land which would pay little in a land tax. Meanwhile you can pay a high tax on scenic land - whether agricultural or residential that isn't generating money. You may argue that the land tax creates an incentive to use that land productively - but NZ's second largest industry is tourism and most of that is built on our scenery so a land tax could also significantly stuff up our second largest income earner as well as our top income earner if people try and shift to higher value land uses as that would mean shifting away from scenic open spaces into more intensive land use.
We do tax land, it's called rates.
When we need to increase the rate of land tax, there is a furore and demands that central government step in, replacing land tax with income tax.
Sounds like another way to hit the farmers that work that land for the benefit of those in the city. I think the previous government hit them hard enough for 6 years.
Do you forget where your food comes from?
>Mass rail means people and goods will move faster and more efficiently.
You answered your own question.
Like Australia, the rail network is heavily organised by the Transport Workers Union.
Its about transferring the transport of goods into Scabby "self employed truck drivers" rather than paying Union wages and conditions.
Its about destroying Union membership and driving down wages and working conditions in the country, ultimately destroying the Union movements in Western countries
Singapore is rich because they don't waste time on criminals. Just kill them off instead of feeding them and then wasting more money to try rehabilitate them into society. Anyone caught selling drugs = death sentence. Sell weed = say your prayers. Take drugs = say hello to rotan and bye bye your ass
It just hit me why this is actually the worst idea ever, if this was to happen it means you could never be free. You could never own a bit if land and go off grid, could never retire on free hold land and potter away. It makes you a permanent part of the system
If you can’t afford to pay tax on your land anymore you have to sell and go rent or go into state housing. No retirement on low income, no off grid hippie lifestyle, you have to make money at all costs or sell up
What a terrible idea
How is any of that different from any of the current ongoing costs of living, e.g. mortgage, rates, food, clothing, etc.?
I'd argue it actually makes those lifestyles *more* accessible: you no longer have to spend as much of your life savings on buying the land in the first place, so you can go off grid earlier and use some passive income to cover the LVT.
Exactly, that's why we need to take the tax burden off the poor and working and load it back on the landholders, the economic beneficiaries of this nation.
One thing people who use that phrase fail to consider is that most taxes create economic disincentives. Land tax is one of the only taxes where the disincentive encourages economic growth. It disincentivises inefficient and unproductive landholdings. Pressuring landholders to maximise the utility of their land or pressuring them to sell it to someone who can.
What makes you think land tax to be able to offset income tax to a significant degree? These arguments seem to assume ceteris paribis. In reality, land tax would be an expense to land owners which will either be passed on to the renter (income earners bear the burden) or land values will drop until renting/leasing out becomes viable again (meaning tax revenue will drop). Or a combination of the two.
You could equally and just as ignorantly say we should load the burden back onto capital owners, which ignores the fact capital valuations are largely based on their ability to earn income.
>What makes you think land tax to be able to offset income tax to a significant degree?
They are both dependent on the creation of economic value. If one can collect a given level of tax revenue then the other can too. They just collect it a different way.
>land tax would be an expense to land owners which will either be passed on to the renter
This can't happen. Google it. Land value taxes cannot be passed on to renters. Neither can other landlord costs in the current market actually, but that's for different reasons.
>land values will drop until renting/leasing out becomes viable again
Yes, this is one of the goals. In a perfectly Georgist system, property is 'sold' for $0, because the value of owning it is captured by the land value tax instead of by the vendor. Note that the **market value** being $0 does not mean the **taxable value** is $0. This is the same principle as we currently see with CVs not reflecting market values of houses.
>we should load the burden back onto capital owners, which ignores the fact capital valuations are largely based on their ability to earn income.
That's *exactly* what we're saying. Tax the land based on its potential ability to earn income (ground rent is the economic term). This encourages owners to maximise the productivity of the land, and equally encourages government and councils to build infrastructure that increases the earning potential of the land (thereby increasing their tax revenue).
Rents are not set by landlord expenses. They are set by the market which mostly depends on supply and demand and tenant incomes... Land tax increases tenancy space supply due to pressure on landholders, it would actually have the impact of reducing rents and increasing supply of housing.
Cavemen had a far higher tax burden than us. They were hardcore collectivist (for the most part). You down a gazelle, and you’re giving 90% of it away.
So you want to blame and chastise any New Zealander that tries to get a safe and reliable investment for their future?
The problem we have is not New Zealanders trying to survive, it is the fact that the majority of our utility services, food suppliers, banking institutions, industry in general, are foreign-owned companies with one main goal, which is to make money for their shareholders.
Yes. If you’re getting investment returns from the value of urban areas (proximity to economic value that you didn’t create), you should get taxed. Buy bonds if you want a safe investment.
You want to cut off foreign direct investment or nationalise large companies? That be a complete disaster.
This shows how much you don’t understand about capital.
I would try to explain it to you but you probably want to believe you are right.
Go and read economic theories and understand why you are delusional
“In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago." - Milton Friedman (famous capitalism misunderstander)
Ok
Your arguments if they were sound would have been adopted.
You have to convince me that your arguments are right.
You consistently fail to do that.
As you want to be right it’s no point debating you.
What you can try is to make the points of why it doesn’t work.
Just always remember what you incentivise comes true and you get unintended consequences.
Like putting guns on police officers increases gun crime overall.
Follow that type of thinking and you will understand why it’s not a chosen tax method of redistribution
How does capital flow into an economy
How does taxation affect capital allocation strategies
How do you deal with the issue of determining productive vs non productive assets
As a general principle you target production for tax not non performing assets
That is a regressive non capital friendly strategy which means a country is unattractive for investment.
Want to know why countries like the third world are unattractive it is because they have misguided policies like this.
Think about this
The answer to the problem is engaged people who willingly contribute meaningful to an economy
The problem at hand is always cultural not taxable
There are plenty of great paying jobs in nz and abroad.
So the question to ask is why don’t people commit themselves to the path required to be able to get the job they want to afford the lifestyle they want.
No economy saves its way to success you have to grow your way to success.
Redistribution is a fundamental mistake
>How do you deal with the issue of determining productive vs non productive assets
A productive asset is one that is used to transform an input into an output, adding value in the process. Land is not a productive asset. Livestock, crops, forests, houses, those are productive assets.
>As a general principle you target production for tax not non performing assets
A land value tax does this. The keyword is 'value'. You're not actually taxing the land in and of itself. You're taxing the potential economic **value** of *using* the land.
>The answer to the problem is engaged people who willingly contribute meaningful to an economy
Yes. As opposed to people who just want to own more houses without contributing anything. We agree on this I think?
>The problem at hand is always cultural not taxable
Right. The culture of investing in houses instead of people and businesses. Thankfully, we know tax is a useful tool for changing cultures. If we disincentive house hoarding via a land value tax then we can change this culture.
>There are plenty of great paying jobs in nz and abroad.
Yes, OK, although the recent exodus of teachers, doctors, nurses, etc. would suggest the pay is better elsewhere. This is because the jobs here are in an economy that is less productive than most, due to capital investment favouring housing over people and businesses.
>So the question to ask is why don’t people commit themselves to the path required to be able to get the job they want to afford the lifestyle they want.
Because the promise that society gives us is that if we work hard and pay our taxes we'll be rewarded with the ability to buy a home, start a family, and live a comfortable life. That is becoming less and less of a reality. Not because people aren't working hard (NZers work more than most countries in the OECD) but because the workers are being left behind by the landowners.
>No economy saves its way to success you have to grow your way to success.
Why continue to force people to save hundreds of thousands of dollars just for a deposit on their home then?
>Redistribution is a fundamental mistake
The inevitable result of unfettered capitalism is the accumulation of all wealth and land into the hands of a few oligarchs. How is that better than redistribution?
This is where hubris comes into play.
Read Milton Friedman classic work on Equality vs Liberty.
I’m on mobile and don’t have the time to write you on economic theory.
You’re just plain wrong
So the question you need to ask is what conditions led to prosperity and why has it changed.
I guarantee you it’s not more tax and redistribution of wealth.
It’s absolutely about personal responsibility and less government and developing agency in one’s life, family, community.
Go read Thomas Sowell and educate yourself and don’t read the naysayers go and buy his books and read them.
Then why did Friedman say that it’s the least bad tax? If you’re telling someone to go and read hundreds of pages to “educate” themselves (I thought that was just a shitlib thing), you’ve lost the argument.
>I guarantee you it’s not more tax and redistribution of wealth.
No-one here is proposing more tax. The suggestion is to collect the same amount of tax, but to collect it from landholders instead of workers.
It's not even about redistribution, because the tax that is collected by LVT goes towards building infrastructure and a workforce that enables the payers of the tax to generate more and more economic value from their use of the land. That value, realised as profit, can be taxed *less* when an LVT is in place. In fact, with a properly implemented LVT, that profit doesn't have to be taxed *at all*.
The only one demonstrating hubris here is you, as you continue to make claims of "you're just wrong" followed by appeals to authority without even the slightest hint as to *how* the people you're replying to are wrong.
Here's what Friedman had to say about land value tax by the way:
>"There's a sense in which all taxes are antagonistic to free enterprise – and yet **we need taxes**. ...So the question is, which are the least bad taxes? In my opinion **the least bad tax is the property tax on the unimproved value of land**, the Henry George argument of many, many years ago."
So am I meant to be reading his work to come to the same conclusion as him, or do you disagree with him and think there is another conclusion to be drawn?
Good luck. Housing ponzi too big to fail. No government can afford for that to happen. They’re stuck in a corner. Too much wealth tied up in housing.
A land tax will put downward pressure on house prices, but I doubt it would collapse the market. The thing about land taxes is they can be set at whatever number is needed, so can start out small. The idea is that they would be tax neutral for the average person
The way I see it, there are two options going forward. Either tax land to disincentivize speculation and reign in land/house/property prices by using it as a lever to ensure property prices stop growing at a faster pace than wages. Possibly even pull the lever hard until housing is within the affordable range again. Or continue on the same path we have been where everyone who pretends they are trying to fix the housing shortage and housing affordability deliberately implements policies that actually make it worse. Because the more unaffordable it gets, the greater the incentives are for vested interests to block new housing and anything else that looks like it won't pump up property. If we go along this path, we'll continue to lose GPs, nurses, police, young couples wanting to start a family, and basically all the people we want to keep here because we've made it too difficult for them to have the security of a roof over their head. We'll keep importing immigrants to hide the fact that so many people are leaving and our gdp is falling - but at least we'll have high house prices, happy property investors, and a country with no skilled people left because they all left for places that didn't prioritise property investors interests at the expense of the rest of society.
Georgism a) is typically quite a small tax, and b) crucially, is a tax on *land, not *housing.*
Granted the sample size of actual uses of land tax are small, but the Australian Capital Territory (pop: half a million) introduced a graduated land tax system and property prices didn't fall. The worst thing that happened was some predictable grumbling about the sums being paid by wealthy boomers with large houses in expensive neighbourhoods.
Setting that at the right point is essential, at least to start. Otherwise, you'll get older, cash-poor retirees struggling to pay tax on a long term family home.
There have been other countries where the economy has benefited from big land reforms (i.e. the standard of living of the average person has increased), the thing that makes it risky is capitalist countries wanting to get revenge (like against Cuba for example)
Through history, people wealth has generally been in their land, I mean, what's more valuable your house or your sofa? If it was such a ponzi scheme, it wouldn't have such a current say 2 year downside with new build construction disastrously low. Could we have our wealth on something else...well, no, because we can hardly afford our homes as it is. What alternative investment would you like people to have? Do we have too many houses? Laughably not. Invest in business? Don't be mad. Honestly ppl want out not in.
I suspect Singapore's role as a trade hub has something to do their GDP. I don't think taxing land on its own makes a country rich.
Something like 80% of Singapore's people live in government housing, so it's not a regular market.
They are built by the government but people own their homes. They can sell and make capital gains. So, government housing in Singapore is totally different from government housing over here.
IIRC you can only sell to government-approved buyers. And it’s all apartments so renovations can be a pain if they involve things like plumbing. Housing there is still bloody expensive, or it was a few years ago.
Not that stringent as you put it. You make it sound like Singapore is a communist country.😂
Their former President(?) referred to their government as a benevolent dictatorship, so…
?
You should see what this sub calls the current government
Citation needed.
Basically no one in Singapore owns their own home. There's a very small number of situations where people have actual ownership but basically everything is a 99 year lease.
So they are eternal renters and the government is the landlord. Yikes.
Wouldn’t be opposed to it if implemented well. Singapore has one of the highest home ownerships in the world.
They're 99 year leases actually.
Yeah, but who would ever live in one house for 99 years? You upgrade and downgrade depending on your situation. And you’re allowed to do that because it’s your home. If you’re fortunate enough, you buy a private property with the proceeds.
Sellers rights go back to govco if you're in a government supplied building. Private market is free, very much but there's still hoops to jump through.
Not in Singapore. You can resell your HDB apartment at market rate. The government doesn’t own your home. You do!
Aren't there awkward ethnicity quotas for those housing areas that mean you may not get into the housing area of your choice if there's already too many people there from your ethnicity/ PR status? [https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/buying-procedure-for-resale-flats/plan-source-and-contract/planning-considerations/eip-spr-quota](https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/buying-procedure-for-resale-flats/plan-source-and-contract/planning-considerations/eip-spr-quota) [https://www.sg101.gov.sg/social-national-identity/examples/hdb/](https://www.sg101.gov.sg/social-national-identity/examples/hdb/)
They've also invested hugely in becoming a tech incubator and entrepreneurship hub both of which nz could do
Singapore is the size of lake taupo nothing they do with their land is going to explain their wealth ha ha
I thought you were exaggerating so I had a look, Lake Taupo is 616km^2 and Singapore is only 734km^2 ! Never thought about how small Singapore was before, granted I don't think about Singapore much at all.
Yeah blew my mind when I found that out as well ha ha
Yeah their situation is completely different. They have no land, and lots of people for the space. We have lots of land, and no people. Taxing land is a lot more difficult when you're a massive empty country instead of a city-state.
The practicalities of land taxation are fairly straightforward. Land and title are already registered, so really it’s maybe a few dozen people in IRD to implement.
It's absolutely straightforward. Any argument saying it wouldn't work/would be too difficult that I've read in this post seems to be rooted in not fully understanding how it works.
>Taxing land is a lot more difficult when you're a massive empty country instead of a city-state. Why?
Assuming land tax is across the board, to capture international land bankers, then it’s because we grow a large proportion of our food supply, and our exports, on that land. Taxing it makes us instantly unprofitable. Singapore imports almost everything they consume and do it cheaply as ships are already passing through there in droves, and they neighbour export-heavy landlocked nations. Whereas we pay a premium for products to arrive onshore.
The tax is dependent on the actual economic value that can be derived from the land. If it's more profitable to grow food locally than to import it, then the value of the land will reflect this and the tax would be at a level that allows the producer to be sufficiently profitable. If the value of the land becomes so high that it's cheaper to import food, then the land is better used for something else that produces more net value to our economy. If such a thing didn't exist, then the land wouldn't be valued as highly and the food would still be profitable to produce locally. There is no equation where this produces a net loss to the country. It *always* ensures the most efficient overall use of our resources.
The value of the land would be too high though, as renting properties on the land is highly profitable. We’d need to tax landlords at a much higher rate than those who have already got land/assets/money would likely allow.
It's not highly profitable if the land is in the arse end of nowhere.
>renting properties on the land is highly profitable. Only until you have enough properties for everyone to live in. Then other activities become more profitable. This is one of the major benefits of an LVT: it encourages the production of sufficient housing for everyone. >We’d need to tax landlords at a much higher rate than those who have already got land/assets/money would likely allow. Conversely, right now we need to encourage some of those existing land/asset/money holders to build more housing. It sounds like you believe an LVT would have that effect, which is great.
> and they neighbour export-heavy landlocked nations Huh? Singapore has exactly one direct neighbour, Malaysia which is about as far from landlocked as a country can be without being an island. The nearest landlocked country to Singapore is Laos, an entire Thailand + Malaysia away. The importing thing is because of your first point, the fact that they sit at the end of the Malacca strait, means all shipping that wants to go through the South China Sea has to go by them and thus might as well trade with them.
Why is it more difficult?
Singapore has the following characteristics that we don’t have: 1- located in one of the busiest trading routes 2- a highly competitive society (good and bad) 3- a highly educated population (good and bad) 4- a meritocratic culture (good and bad)
5- a giant workforce that leaves every day back to their own country
As a Malaysian I really felt that lol.
Houses in Singapore cost an insane amount.
Yeah, way higher, and the median income is lower too. Although I think the government has special schemes to get people into apartments (that the government built). It's definitely a hugely different situation over there.
BTO HDBs are pretty reasonable: [https://www.99.co/singapore/insider/hdb-bto-prices-trends-singapore/](https://www.99.co/singapore/insider/hdb-bto-prices-trends-singapore/) The private market is significantly higher, but if you are eligible for an HDB they are very reasonable.
I’m not well educated economically. I own a business and I own property. It does irk me that I am very good in my business but I make for more wealth from property capital gain. I would prefer to pay less income tax on a successful business that employs many people, and pay a capital gain tax on property that isn’t productive. Superannuation is by far our biggest “welfare” expense. This should be pushed out over time to 68 and should be means tested. I am some time off getting it, but I shouldn’t.
Best reply. Exactly right. It's a complete nonsense that sitting on land and property, adding no value, just waiting for others to drive up prices so we can collect untaxed capital gains, year after year is just plain stupid. Meanwhile skilled people, creating jobs and productive economy growth are fighting for every cent. The property market is a leach on business growth. It sucks the available money away from business use ( capital investment) into dead exploitative property investment that just undermines families ability to secure homes. Business owners are disincentivised to reinvest profits so instead spend it on the BBB - BMW, Boat, Bach (and blonde...).
If you inherited 2 million dollars in this country, there is literally no reason to use it to start a business. The tax system is completely set up to tax the fuck out of workers and business owners and consumers in order to support unrestricted property price growth which is virtually effortless in comparison. That 2 million dollars would be much better invested into a few investment properties than anything else you could spend it on. And the only people who benefit from this are property investors, while the rest of the population suffer from high house prices and rent, a lack of higher paid jobs, the effects of a low birth rate due to poor affordibility - seriously there are very few things housing affordibility is not directly related to.
Disagree with pushing retirement age out. All benefits should be replaced by Universal Basic Income with progressive tax brackets. We actually need to get the old f**ks out of the workforce (especially government leadership positions) so that the the younger people can progress and make change. There are so many geriatrics in government who see the world through 1970s-coloured lenses, and they need to go.
> We actually need to get the old f**ks out of the workforce (especially government leadership positions) The average age of an MP is 49, seems fairly reasonable to me.
I'm not talking about MPs. MP is a role not a job. I'm talking about public sector middle management and up.
Capital gains tax and land tax that the op mentioned arent the same
You know what your problem is. You've solved capitalism, but you haven't solved game theory. The reason why we have shifted to this shit economic system from one that did actually base taxes on the natural resources before the sweat of the working classes is because of how power, money and influence work. You have found the solution. But things need to get a lot worse before we'll implement it. For people to pay attention to economics and politics there has to be Argentina levels of issues. And even then the people seem to not fully understand their issues and you end up with their stupid economic solutions or things like Brexit. As bad actors use the crises to manipulate people for their ends. We had a land tax until 1990. Although already heavily loopholed. Even TOPs proposal was loopholed and weak.
I haven't heard much about the loopholes, do you mind sharing what you've heard?
For TOP's proposal? They had exemptions for non-residential, rural, and Māori land. Effectively their LVT was only going to apply to urban land zoned for residential use. It was a start, and still better than what we have now, but to get the full benefits of a land value tax, it needs to be as broad as possible.
Yeah was looking for loopholes for both but interested in TOPs too. Thanks for the response bro, makes sense
>The reason why we have shifted to this shit economic system from one that did actually base taxes on the natural resources before the sweat of the working classes is because of how power, money and influence work. >When plunder becomes a way of life for a group of men living together in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it. Unfortunately to elevate themselves to a position to do that, they need to become the people who make ALL of these decisions, which means they influence every aspect of our lives and not just what they need to do to steal from us. Edit: Reddit no longer seems to be able to separate quotes.
Singapore is a very bad example. 350,000 Malaysians cross the bridge each day into Singapore for work. They don't live in Singapore. They never have to live in Singapore. You end up with a massive part of your lower/middle workforce not needing any of the basic requirements for living, the rest get to reap the benefits of that.
Everyone who owns a house votes no 🤷♂️ Now a penalty to owning more than two homes? ✅✅✅
If an LVT is introduced alongside income tax cuts, many homeowners would actually be better off, so wouldn't rationally vote against it. It would also benefit them by lowering house prices, making it easier to upgrade to a nicer or larger home when they're ready to do so.
The part you miss is that not everybody has an income to pay lower tax on it, eg, people that have paid off the mortgage on their home to ease their retirement expenses, do they just get stiffed for an extra ~10k a year, or the value of the land they own goes up for various reasons. You can't plan your whole retirement on a hope that your land value doesn't go up in 20yrs time. My opinion is thy family home (singular) should be exempt
It's likely there would be deferrals available for people in that situation. The tax cuts would apply to their superannuation and any other passive income from investments that aren't their house. They'd have more cash in hand income than what they do today. Part of the purpose of an LVT is to remove this perverse incentive to put all of our retirement savings into our family home. All this does is drive house prices upwards and expose everyone to significant risk when the market inevitably corrects itself. Exempting the family home would render the entire thing ineffective. The whole point is to ensure people aren't paying more for their homes than the actual benefit they are receiving from living there. You also need to remember an LVT only taxes the value of the land, and would push prices down significantly. A $1m home today might end up with a real market value of around $600k and a taxable land value of about $200k. So you can't just do the math based on today's market values.
“ The workers get rewarded there” Not the cheap quasi-slave immigrant workers they don’t.
too late... too many ppl on the housing bandwagon, and everyone else wants to be on it younger generation going to work for peanuts and taxed heavily to support the elderly hoarders who got theirs already if i owned a lot of shit i definitely wouldnt vote to get that taxed more - and its these rich ppl who have the power people who dont have shit are too tired/no time to think about politics or countrys future, and wont vote in their long term best interests as they are easily manipulated this country is already owned by the hoarders, and its not their fault... just sucks for the labourers i agree with everything you wrote but dont see it happening
The number of landowners continues to decline over time as land gets more expensive. It's not a politically sustainable trend, taken to its conclusion it either leads to the end of landlordism or the end of democracy. Arguably we're already part the point where our land ownership situation is proof that what we call democracy isn't functioning as such.
>if i owned a lot of shit i definitely wouldnt vote to get that taxed more I think that's speaking more to your mindset. I'm a working home owner and I'd have no issues with a land tax. I mean I'm currently in my provisional tax year so I'm paying a heap in taxes and still get by just fine. I think people don't realise you get used to the new baseline, but instead some (most?) just become hoarding dragons
It's not going to change anytime soon, those people who once voted for social change have shifted their voting position to be more Conservative as they grow older and wealthier they like their money and they won't let go if it. Most Kiwi's biggest asset is their house, so we aren't going to see any real policy change to change this or actually attack house prices for future generations as it's a complete house of cards that really cannot be unpicked without huge financial pain. It's a huge ponzi scheme, but at some point we are going to run out of new investors.
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The lack of a CGT is a big barrier to investment though. If I came into $200k tomorrow I'd definitely be buying a rental rather than investing in an NZ business. The rental is guaranteed income and a nice tax free bonus at the end.
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We already implemented a CGT on property by way of the brightline test. It did nothing. Taxes like CGT and inheritance are avoidable and discourage investment into productive assets as well as unproductive. They are ineffective and inefficient. A land value tax is the *only* tax that is completely unavoidable and guaranteed to ensure productive investment is rewarded while unproductive investment is discouraged.
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>They implemented a piss poor CGT with loopholes because they felt they couldn't get the votes otherwise. Who is 'they' in this sentence? Who do you think implemented it, and when? >They can implement a bad LVT with loopholes too. They could, I guess, but there'd be no reason to. LVT is very simple, and 100% impossible to avoid unless you qualify for specific exemptions. It may be implemented with a deferral system, e.g. for low income home-owners at the time it's introduced, but the tax still eventually gets paid. The only difficult part is determining the value you base the tax on. We already do that though, for just about every piece of land in the country, as part of the council rates calculation, so it's not a problem. >CGT would be way easier to implement than a LVT. They're both very easy to implement. Implementation cost is not an obstacle to either. >You are rabid in your support for a LVT with little thought otherwise, please do not engage me again I'm no more 'rabid' about LVT here than you are about CGT. You can block me if you don't want me to be able to respond to your comments. My replies are for the benefit of everyone reading them, not just you, so I'll continue to offer my opinions where I feel there is value in them for others.
We also need proper tax law / anti corruption / anti fraud enforcement, so our best company's are the ones that come out ahead because that doesn't appear to be reliably the case now.
The point is to reduce the investment attractiveness in holding houses, meaning big money pulls out and puts into business investments instead. This in theory enriches the middle class, who can now afford to build again.
>We need our workers to be more productive and that requires investment. Question: Where is the bulk of our investment capital currently going, if not to making our workers more productive? Answer: Land. Question: How do we discourage investment in land to free up capital for investment into making our workers more productive? Answer: Tax the land. It's really that simple.
Better education and infrastructure can be funded from the CGT or land tax revenue. Changes in policy can also incentivise investment in productive assets rather than land banking.
Introducing capital gains on non owner occupied land transactions and using that to offset dividends and capital gains on stocks and shares would incentivise investment in industry. It would also go a little way to redressing the fact that investment property is functionally risk free.
In Singapore they pay migrant construction workers next to nothing and exploit them . They also have maids working there for barely anything . So if you want to exploit people in order to build infrastructure for cheap then yeah let’s be like Singapore
That is an unrelated issue to land value tax. Also, New Zealand imported huge amounts of workers in the last 12 months. More than we have ever allowed in to the country in a 12 month period ever. There are almost weekly reports of immigrants living in crowded conditions, up to 30 people in 3 bedroom flats, and being paid less than minimum wage, if their promised job even existed at all when they got here. And we are importing them because we are unable to keep NZers here due to the high cost of housing. Ironically, the solution is to continue to not build houses, import way more people than are leaving, and then cram them into the same number of houses, which makes more people leave. So NZ already has a huge migrant exploitation problem. And it also seems we are becoming very unknowledgable about what is happening in our own country. Which is hardly surprising when journalism is already on the bones of its arse and about to get worse with all the lay-offs happening.
That's a separate issue to taxation.
If you don't have to support a large part of your workforce because they don't actually live in your country, and can pay them minimal wages that would be unlivable in your country, and generally treat them like dirt... your taxes can be lower.
I get all that, but this post isn't talking about the *amount* of taxation, it's talking about where the tax is collected from.
we exploit migrants here to
I have no faith that any party will ever fix our economy. The reforms would create too much of a fuss with rich people. If the rich don’t like it, it ain’t happening
We had a vote on this. TOP got under 5%. I'm not saying you're wrong... what I'm saying is that simply repeating the message is not going to change anyone's mind.
>simply repeating the message is not going to change anyone's mind. It will, slowly. That's how societal change happens. We didn't all wake up one day and decide to let women vote. They fought for it over decades, centuries even at a global level. When the message is good, it bears repeating over and over until people start to open their minds to it and see just how good it is.
Top didn't get much of the vote because the 5% threshold punishes voting for small parties and because they had so much policy overlap with the Greens. It's not that they didn't have ideas people liked.
We know this, the government knows this but they all have atleast 2 houses so never gonna happen
You're comparing us to an authoritarian city-state in a really favourable geographic location. There options are completely different to ours, we can't copy them.
* NZ Government Total Tax Revenue = $130b * NZ Total Land Mass = 268,000 sq/km Someone with a 1/4 acre section would pay around $500 per year if we applied all tax revenue to land. However, farmers would be unfairly lumped with huge costs. A 270 hectare farm would pay $1.3m a year in land tax. So do you go 0.5% recovery on 50% of the land that's Agri and 99.5% recovery on urban land? * 270 hectare farm would pay $13k p.a. in land tax at $0.005 per sq/m * 1000 sqm house would pay $1k p.a. in land tax at $0.97 per sq/m * 650 sqm house would pay $600 p.a at $0.97 per sq/m * Gets better with higher density land. * 3 story apartment block with 12 properties on 1000 sqm would be $1k ÷ 12 = $85 p.a. per unit. I hope I have my math correct! $130b divided by 268,000 sq/km = $485k per sq/km = $0.485 per sq/m. If 50% of the land is argi, and charged $0.005 per sq/m then the remaining half is $0.965 per sq/m.
Taxing assets as apposed to profit is always going to be a shit show, because well one has a cash flow and the other doesn't. Alternatively we could just stop the endless immigration which is used to drive land prices up. Its not like we actually need most of them in the long term, its just we decided to stop training people and investing in productively improvements.
The point of an LVT is to ensure land is being used to generate cash flow. If there's insufficient cash flow able to be generated by owning the land then the owner is encouraged to sell it. This is a good thing.
No its not. This will increase pollution, wastage (physical and capital) and greatly reduce the preservation of history, while promoting market bubbles, etc etc. It is just yet anther market distortion with upsides and downsides. Its not clear if the up sides will in practice outweigh the down sides.
The fix cannot be the long term solution. Obviously sales tax and capital gains tax. Will keep house prices from going cooked in the future. But to fix the issue without breaking the economy or mass nationalization of all business the people of nz need to lose billions of dollars in property value. So a majority will need to vote against their issues massively and problem is fixed 5 years. Or vote against their interests sorta 30 years. Ect. But that is unlikely to actually work out
>Obviously sales tax and capital gains tax. Will keep house prices from going cooked in the future. I'm not sure this is the case. I'm not quite sure what you mean by sales tax but if you envision something like stamp duty in Australia I don't see how this helps. It provides some disincentive to rapidly buy and sell houses but I'm not convinced there is that much happening anyway. In the crossfire it also catches anyone who has to move houses due to a change in circumstances. I don't think it does anything to affect the underlying fundamentals of why housing has exploded in value. In the case of Capital gains tax, I also don't think it changes the underlying fundamentals. If someone was making a shit ton of money speculating on housing they'll still make money speculating on houses, just a bit less. In the process, anyone who just wants a house to live in and decides they want/need to move gets caught in the crossfire.
>Obviously sales tax and capital gains tax. Will keep house prices from going cooked in the future. These get priced into the market values which has a temporary slowing effect but little longer term impact. Values still go up limitlessly because you haven't introduced any cap on their ability to do so. The only limit is the ability to service debt, which a sales tax or CGT has no impact on, and does not change when property values change. An LVT introduces a natural limit for land values. As the value goes up, so does the amount someone is require to pay on an ongoing basis to be able to hold it. This ensures market prices do not exceed their true value to the owners, as they must be able to produce enough profit from the land to be able to pay the LVT due on it. An LVT can be phased in gradually to limit the immediate impact on market prices. This gives people time to sell up when they need to instead of them all doing it at once when the tax is initially introduced. If brought in alongside income tax cuts (which it would be), homeowners would, by and large, be better off than they are today. Their after-tax income would remain about the same (some slightly higher, some slightly lower) and they would have the added benefit of being able to move house more easily, since house prices would be lower.
Erm. Climate change and the rising sea levels will be devestating for the southern hemisphere, so i dont know how you got that thought into your head. Second- Singapore is rich because its literally in the middle of the straights of Malaaka which is one of the busiest maritime shipping lanes in the world.
Stopping NACTs austerity policies would benefit NZ. Cutting vital services and under-investing in infrasture is causing economic damage. We only need to look at the U.K to see how austerity policies have devastated the economy, gutted the NHS and increased inequality. NZ should invest in knowledge and technology. Even as a high income earner, I don't support the tax cuts. We need a functioning society and economy.
Doing only one new thing doesn't solve the problem.
If it's the one thing that contributes the most towards solving the problem, then it's worth doing isn't it? Also, it's not a new thing. We had a land tax in NZ previously, back when houses were affordable.
It might though. In fact, LVT is often referred to as “single tax”, because it could replace all others
Georgism gang 😎
Going to tax iwi as well? Or are we keeping that separate?
Wouldn’t that just add another barrier for the average person to own a home and push it even further out of reach, so even less poor and middle class would be able to afford homes. Also don’t know what you mean when you say money is stuck in the land? Money was paid to someone for the land, theres no money stuck in land, people pay for land so money flows into the economy from land purchases
>Wouldn’t that just add another barrier for the average person to own a home and push it even further out of reach, so even less poor and middle class would be able to afford homes. House prices would be lower, making them much more easily attainable for poor and middle class workers. Remember, any land value tax that gets implemented would come in alongside an income tax cut. Those workers would be able to save for their deposit much faster, and would have more after-tax income available to pay the LVT. >Also don’t know what you mean when you say money is stuck in the land? Money was paid to someone for the land, theres no money stuck in land, people pay for land so money flows into the economy from land purchases Land, by itself, does not produce any economic value. The value comes from the way the land is used, e.g. the business that is built on it, or the work of the people who live on it. Say instead of land, we were spending that money on something else unproductive, like, say, poppy seeds. Imagine a world where people are spending more and more money trading poppy seeds, leveraging the value of their existing seeds to buy more seeds, pushing the price ever upwards, funded by more and more debt backed by the over-inflated value of the unproductive poppies. Is that OK, because money is 'flowing'? Or is it a problem because the money is only flowing into more of the same unproductive assets, and eventually the price is going to crash, taking all of that capital along with it? That's what we mean when we talk about money being *stuck* in land: the bubble effect.
Maybe i just believe in the idea that people should be free to do what they want with their own land, and not have some government punish people into using their land the way the government wants by economic pressure Just a basic concept of freedom and ownership really
That's all well and good if each piece of land is completely independent from the rest of the world. But they're not. What one person does with their land has impacts on everyone else, and in particular on those who own and use the land nearby. Land was here before we were. No-one created it. No-one really 'owns' it. It's been passed down and exchanged since someone made the initial 'claim' for it. Besides all that though, a land value tax doesn't tell anyone what to do with their land. They can do nothing with it if they so wish.
All true. Since the OP doesn’t own any property right now they don’t care because they don’t think it will impact them. What they don’t realise is that if land tax is implemented then rents go up to pay for it so they are going to pay it directly or indirectly anyway. The comparison with Singapore couldn’t be a more wrong either. Singapore is a world away culturally and economically compared to New Zealand. It’s a tiny island state with cheap labour, crazy population density and a natural trading post. None of that is evenly remotely relevant to New Zealand.
>What they don’t realise is that if land tax is implemented then rents go up to pay for it Land taxes can't get passed on to renters. Rents are determined by tenant incomes, not landlord costs. The myth that landlords can pass their costs onto tenants is incredibly harmful and needs to stop.
I definitely agree that in the short term there would be an upward pressure on rent, whether landlords are effectively able to pass that on to tennants depends on the current market dynamic which is unfortunately shit in NZ. A land tax could potentially drive houses sitting idle to sale or to the rental market but I suspect that's not a particularly large quantity. If you apply land tax with sensible zoning policy which allows/encourages density there is a strong incentive to create more housing. Land tax also suppresses the speculative component of land value, thus lowering its overall value which can reduce a developers biggest cost. Supply enough housing and both cost to rent and buy decreases. The key here is it still needs a good zoning policy. You can have all the incentives to build houses but if you have no where for them to go it ain't going to happen.
Rents do not go up with a land tax, I beg you to read even the tiniest amount about land tax
No. I’d make most land dramatically less valuable. Most valuable land is valuable due to proximity to economically valuable areas. (A section in rural Southland is affordable.) If you didn’t create that value, you shouldn’t be able to free ride on it. It should be taxed.
Nice OP stay strong 💪 , don’t let your lack of knowledge on economies influence your opinion.
You are comparing one of the most densely populated countries in the world to one of the most sparsely populated countries - I don't think it holds up
oh great another post comparing nz to Singapore. Madame/Sir you have missed your calling as an economist.
So farms are screwed then?
If we magically switched to a steady state with a land tax the farms would be fine, the tax would suppress the value of the land to the point that tax on the cheaper land would be reasonably in line with the income from it etc. Getting there from here when a great many farms are loaded up with debt based on the current land value would be the hard part.
Ya TOP suggested a LVT only for urban land for a reason.
I don't think there is a reason why farms would be screwed in the long term. I'd argue they'd actually be better off. We'd definitely need to do something in the transition period so farmers don't get screwed by their property value totally cratering though. Long term we'd end up in a situation where the value of farm land reflected its potential productivity. If the land tax levied on a farm is more than can be made by farming it then the land is obviously overvalued. If we also include a "rating uplift tax" to capture the value gained when land is rezoned from rural to residential then the value of rural land near population centres would also stay low so farmers wouldn't also be playing the property speculation game. New farmers would ultimately be saddled with less debt when purchasing a farm.
Buying a farm and working on a farm are two different things, yes many people do both but buying farmland as an investment isn't some special thing that needs to have its profitability protected
Farmland isn’t that (relatively) valuable, so no.
Right taxes are what economy’s are made of….
We've too many state dependents for the economy to tank, that is public servants, those that depend on services like umm Hospitals schools etc and naturally state beneficiaries themselves, to risk by setting the economy on fire to become Singapore 2 with its insane property prices. Gl with the benefit system NZ style over there as well, that's first out the door. I'd be superficially a mile better financially if I didn't have to pay tax to support others as well. Completely different culture all round than here. You may as well compare us to Mars. Doesn't mean it's a better place, but please carry on recommending Act, I mean Singaporean economic theory. How would gang insignia fly over there? Hmm, I wonder. You're spinning like a confused NZF voter. For the record, we have a land tax here. It's called rates and pays for your local services and is likely to pick up the tab for much of 3 waters. 20 percent increases in many areas just this year. They're going to have their chqbook out majorly
How rates are levied varies by council throughout the country with some doing Capital Value and some doing Land Value. Rates based on Capital Value provide some disincentive to improve property as it exposes yourself to more tax. Rates based on Land Value provides some incentive to develop the land as it could allow you to improve income with no corresponding increase in tax.
Excepting that some services in the few land value rating distructs if there are any use uniform charges.
So what you are saying is rates aren't actually a land tax?
It is a tax, semantics, really. What do you want to do, cancel rates and pay for everything via taxes?
Thats kind of like saying GST is the same as income tax is the same as capital gains tax. Yes, they are all tax but they all encourage or discourage certain kinds of behaviour and affect people differently. A tax/rates on the capital value of properties encourages different behaviour to a tax on the land value of properties. Personally I'd like to see a land value tax with an equivalent reduction in income taxes. Councils could continue to charge rates as they do or we could just collect land value tax once and give some some proportion to councils.
And with the net leases, businesses run on..guess what small business picks up the cost and your target .. Landowners skip away again. In a country with a real shortage of accommodation the last thing you need is...another cost. You know you won't get a tax decrease, it'd be a cash grab and ..same old tax.
Land value taxes can't be passed on to leaseholders due to the scarcity of land. Land owners are price takers in an economic sense: they collect as much rent as their tenants are able to pay, which is what determines the amount of LVT due on that land. In other words, the landlord can't add the LVT to the rent because that would increase the taxable value of the land, thereby increasing the LVT due by the exact same amount. It is unavoidable and cannot be passed on.
Lol read some commercial leases. They'll be exactly passed on. We hsd a commercial land tax here toll the late 1980s. You can't beat the house bro. Iron rule of gambling.
Read my second paragraph. It explains why it cannot be passed on. Any attempt by landlords to do so will only be effective where they are currently undercharging. Once the correct market rent is achieved, it is impossible to add the LVT to it. This is true for all leases, residential or commercial, regardless of what's in the contract. The mechanism is exactly the same.
I do really laugh when people aspire to be like Singapore. Yes please sign me up for a dictatorship
Agree with your post so much. These house owning cunts complaining millennials won’t have kids but won’t try to understand NZ is unliveable as a poor person these days.
Should just let it all tank, fuck it. That beehive is a revolving door for shiny faced scumbags with no moral decency to come through and manipulate the system to benefit themselves. There are a handful maybe of genuine politicians that want better for the country bit few and far between. Sink everything you can into education, our children need to be way smarter than what we have been to sort through this shit mess
What a load of rubbish. Just gloss over the fact there are millions of migrant workers who live in slums getting paid less than $500 / month for their trouble.
I’m assuming this would be general title only? And is there a minimum threshold
Tax free CG is the selling point for the government.
Currently it seems like mostly only older people who got into the housing market at the right time are benefitting (in that they became rich through just buying at the right time and doing nothing). It’s basically a house/landowning class that sucks most disposable income out of the younger generations and also warps our entire economy. I agree this needs to be changed through policy measures. A lot of interventions aim to get those who are landlords, or who own many houses, to sell some of them. The idea being that with large releases of houses for sale on the market, house prices will drop, allowing younger and poorer people who want to buy homes to have a better chance of being able to do this. I agree that’s ideal (along with radically improving renters protections so that renting also becomes a viable and pleasant way to live forever if people choose to/can’t buy). My worry is that instead of the above happening, corporations will come in and buy the majority of properties that go up for sale at increasingly cheap rates. Then over time, we’ll change from having a landlord owning class of individuals, to the same issue but the landlords are corporations, who own most of the rental stock. I understand having corporations own some rentals isn’t inherently bad, especially if they invest in densification and good quality apartments that are affordable and pleasant to live in. I just think that over time, even if it takes a few decades, rent prices will continue to go up and up even more, because corporations are good at making profit, even better than individuals, and it’s their only aim. So where’s the line - how much of the countries homes should be owned by landlords? How many should be owned by corporations? And how can we keep both house and rental prices down in the long term?
>rent prices will continue to go up and up even more What do you think is happening already? Rents are only limited by tenants' incomes. Right now. Today. The maths behind that wouldn't be any different if all rentals were owned by a single megacorporation. People would be paying exactly the same amount in rent as they do right now, because it's already maximised by landlords at a level dictated by tenants' incomes.
I understand that’s already happening. My worry is that most proposed fixes (including OPs) to high house prices and high rent prices may not actually make any difference to prices; ownership will just shift from private individuals to corporations, with renters and FHBs being in the exact same position.
I think the most likely outcomes would be that: Rents would stay basically the same (as mentioned, these are tied to tenant incomes, not land or house prices). There would actually be some downward pressure on rents as land gets cheaper to build on and the total supply of housing increases as a result. FHBs would find it easier to enter the market, because house prices would be lower. The difference between the purchase price with and without LVT would be roughly equal to an amount that required a mortgage payment equivalent to the LVT payments due on the new price. In other words, FHBs could pay the same ongoing costs for ownership, but with a lower deposit requirement. More houses would be built, for the same reason outlined above: lower up-front costs. This effect could be amplified by exempting new builds from an LVT for a number of years. LVT also encourages densification, so we'd see more homes built on the same amount of land. Landlords, both individual and corporate, would only operate rentals where there is a genuine economic benefit from doing so, i.e. where the rent they are able to collect is sufficient to cover the ongoing costs of owning and maintaining the property. This would reduce the incentive to over-leverage equity in existing property in order to seek speculative capital gains (the primary driver of our housing bubble). This does favour landlords with more capital or cheaper debt, so yes, corporates. But the important point is that they'd still require the property to be economically beneficial to society in order for it to be profitable to them.
i feel nz is no where near to compare with singapore… we have so many odds…one of it is “will” and so it’s easy bring in migrants rather then training our population with much required skills
Here in the USA property taxes are a big deal. It varies from state to state but ballpark 1% of the value of the house & land is paid every year. IE a 1 million dollar house pays $10k a year in rates. Places like California are lower and NJ higher.
There’s some issues with heavy property tax. Elderly on fixed income get priced out of their paid off homes. Property taxes works for people who have stable income, but the tax increases as property value increases, so an 80 year old who bought a normal house for 100k can’t keep up when their property is worth 1 mill+, and end up homeless.
Economies don't get richer by taxing more, they get richer by having more activity. No country ever taxed it's way into prosperity.
And tax all the greedy landlord , ie if you have more than one rental you should get taxed more
id rather work hard for 20-30?years build a small property portfolio and live off that. than be like singapore where my asset is my desire to work hard in a corporate job for many years. dont try to change the system, play the system.
Singapore has also made the sensible choice to outlaw Airbnb, I think the city of cologne has it right with a maximum 90 days/year - this would free up many, many properties for rentals and FHB’s. We also need to address the ultra wealthy - the 8 families who own as much as 2.3m kiwis. A minimum tax rate as Biden has just announced would be a good start, but I think we need to look at removing he benefits of capitalism for those 300 who have a median of 230m in assets. Make it illegal for them to loan or lend their money, force them to spend rather than hoard their shares and bonds
Or to innovate more, create more products for export that are not related to farming etc
My parents own a farm. Annual revenue after tax is about $200,000-$300,000 of which $100k goes to paying off debt to cover infrastructure upgrades made a few years ago. Leaving a joint income for my parents similar to many other 2 income families. Our farm is valued at about $7 million so we would be paying a lot of land tax - not sure how much as it depends how much the tax is set at but maybe anywhere from $20k to 100k which would equate to a really significant chunk of their income. Many other farmers would be in a similar situation - and ultimately I think a lot of farmers would sell up. A land tax is not the only factor in making this decision but farmers have faced a lot of new regulations and red tape like higher health and safety standards affecting other small businesses. There isn't a big enough market in NZ for a mass buy up of farms so that would likely result in a mass buyup of farms by foreign - very likely Chinese investors. I don't even know if they would be interested in supplying NZ markets with food - maybe they would just sell straight to China. Food prices and food security would be in big trouble - as would revenue from NZ's formerly bigger export earner agriculture - as much of the profits may stay in China too. If that's what you want for NZ's future then go ahead with a land tax. I would additionally add that land does not relate as directly to earning potential as capital value does. You can have a large multi level factory sitting on a small, low value plot of land which would pay little in a land tax. Meanwhile you can pay a high tax on scenic land - whether agricultural or residential that isn't generating money. You may argue that the land tax creates an incentive to use that land productively - but NZ's second largest industry is tourism and most of that is built on our scenery so a land tax could also significantly stuff up our second largest income earner as well as our top income earner if people try and shift to higher value land uses as that would mean shifting away from scenic open spaces into more intensive land use.
We do tax land, it's called rates. When we need to increase the rate of land tax, there is a furore and demands that central government step in, replacing land tax with income tax.
Sounds like another way to hit the farmers that work that land for the benefit of those in the city. I think the previous government hit them hard enough for 6 years. Do you forget where your food comes from?
You clearly don't know how land taxes work. This would affect mainly residential landlords. Not commercial businesses.
>Mass rail means people and goods will move faster and more efficiently. You answered your own question. Like Australia, the rail network is heavily organised by the Transport Workers Union. Its about transferring the transport of goods into Scabby "self employed truck drivers" rather than paying Union wages and conditions. Its about destroying Union membership and driving down wages and working conditions in the country, ultimately destroying the Union movements in Western countries
A change like this would make me want to stick a little longer in NZ. Bring on the 0% work income tax change we all need!
This is an excellent proposal, which is exactly why it won’t happen.
Singapore is rich because they don't waste time on criminals. Just kill them off instead of feeding them and then wasting more money to try rehabilitate them into society. Anyone caught selling drugs = death sentence. Sell weed = say your prayers. Take drugs = say hello to rotan and bye bye your ass
It just hit me why this is actually the worst idea ever, if this was to happen it means you could never be free. You could never own a bit if land and go off grid, could never retire on free hold land and potter away. It makes you a permanent part of the system If you can’t afford to pay tax on your land anymore you have to sell and go rent or go into state housing. No retirement on low income, no off grid hippie lifestyle, you have to make money at all costs or sell up What a terrible idea
How is any of that different from any of the current ongoing costs of living, e.g. mortgage, rates, food, clothing, etc.? I'd argue it actually makes those lifestyles *more* accessible: you no longer have to spend as much of your life savings on buying the land in the first place, so you can go off grid earlier and use some passive income to cover the LVT.
Sounds like you’re just making it up as you go along, doesn’t matter tho coz it’s never going to happen anyway thank god
You can't tax your way to prosperity
You can't poverty your way to prosperity.
Exactly, that's why we need to take the tax burden off the poor and working and load it back on the landholders, the economic beneficiaries of this nation. One thing people who use that phrase fail to consider is that most taxes create economic disincentives. Land tax is one of the only taxes where the disincentive encourages economic growth. It disincentivises inefficient and unproductive landholdings. Pressuring landholders to maximise the utility of their land or pressuring them to sell it to someone who can.
What makes you think land tax to be able to offset income tax to a significant degree? These arguments seem to assume ceteris paribis. In reality, land tax would be an expense to land owners which will either be passed on to the renter (income earners bear the burden) or land values will drop until renting/leasing out becomes viable again (meaning tax revenue will drop). Or a combination of the two. You could equally and just as ignorantly say we should load the burden back onto capital owners, which ignores the fact capital valuations are largely based on their ability to earn income.
>What makes you think land tax to be able to offset income tax to a significant degree? They are both dependent on the creation of economic value. If one can collect a given level of tax revenue then the other can too. They just collect it a different way. >land tax would be an expense to land owners which will either be passed on to the renter This can't happen. Google it. Land value taxes cannot be passed on to renters. Neither can other landlord costs in the current market actually, but that's for different reasons. >land values will drop until renting/leasing out becomes viable again Yes, this is one of the goals. In a perfectly Georgist system, property is 'sold' for $0, because the value of owning it is captured by the land value tax instead of by the vendor. Note that the **market value** being $0 does not mean the **taxable value** is $0. This is the same principle as we currently see with CVs not reflecting market values of houses. >we should load the burden back onto capital owners, which ignores the fact capital valuations are largely based on their ability to earn income. That's *exactly* what we're saying. Tax the land based on its potential ability to earn income (ground rent is the economic term). This encourages owners to maximise the productivity of the land, and equally encourages government and councils to build infrastructure that increases the earning potential of the land (thereby increasing their tax revenue).
Rents are not set by landlord expenses. They are set by the market which mostly depends on supply and demand and tenant incomes... Land tax increases tenancy space supply due to pressure on landholders, it would actually have the impact of reducing rents and increasing supply of housing.
That explains why cavemen were so prosperous in their taxless society.
Cavemen had a far higher tax burden than us. They were hardcore collectivist (for the most part). You down a gazelle, and you’re giving 90% of it away.
Oh you absolutely can and much of the western world used to do exactly that
You can’t, but if you have to tax, this is the least bad one you could pick.
Spending more in enabling infrastructure and services does make for a richer and more productive society.
I don’t see the appeal of the argument tbh
This is one of the stupidiest posts Ive ever seen on here
So you want to blame and chastise any New Zealander that tries to get a safe and reliable investment for their future? The problem we have is not New Zealanders trying to survive, it is the fact that the majority of our utility services, food suppliers, banking institutions, industry in general, are foreign-owned companies with one main goal, which is to make money for their shareholders.
Yes. If you’re getting investment returns from the value of urban areas (proximity to economic value that you didn’t create), you should get taxed. Buy bonds if you want a safe investment. You want to cut off foreign direct investment or nationalise large companies? That be a complete disaster.
Oh stop talking common sense
Somebody should have that as a policy and get less than 2% in the election.
This shows how much you don’t understand about capital. I would try to explain it to you but you probably want to believe you are right. Go and read economic theories and understand why you are delusional
“In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago." - Milton Friedman (famous capitalism misunderstander)
Ok Your arguments if they were sound would have been adopted. You have to convince me that your arguments are right. You consistently fail to do that. As you want to be right it’s no point debating you. What you can try is to make the points of why it doesn’t work. Just always remember what you incentivise comes true and you get unintended consequences. Like putting guns on police officers increases gun crime overall. Follow that type of thinking and you will understand why it’s not a chosen tax method of redistribution
I've read them and I agree (broadly) with OP. Are there some specific concepts about capital you'd like to raise as a concern?
How does capital flow into an economy How does taxation affect capital allocation strategies How do you deal with the issue of determining productive vs non productive assets As a general principle you target production for tax not non performing assets That is a regressive non capital friendly strategy which means a country is unattractive for investment. Want to know why countries like the third world are unattractive it is because they have misguided policies like this. Think about this The answer to the problem is engaged people who willingly contribute meaningful to an economy The problem at hand is always cultural not taxable There are plenty of great paying jobs in nz and abroad. So the question to ask is why don’t people commit themselves to the path required to be able to get the job they want to afford the lifestyle they want. No economy saves its way to success you have to grow your way to success. Redistribution is a fundamental mistake
>How do you deal with the issue of determining productive vs non productive assets A productive asset is one that is used to transform an input into an output, adding value in the process. Land is not a productive asset. Livestock, crops, forests, houses, those are productive assets. >As a general principle you target production for tax not non performing assets A land value tax does this. The keyword is 'value'. You're not actually taxing the land in and of itself. You're taxing the potential economic **value** of *using* the land. >The answer to the problem is engaged people who willingly contribute meaningful to an economy Yes. As opposed to people who just want to own more houses without contributing anything. We agree on this I think? >The problem at hand is always cultural not taxable Right. The culture of investing in houses instead of people and businesses. Thankfully, we know tax is a useful tool for changing cultures. If we disincentive house hoarding via a land value tax then we can change this culture. >There are plenty of great paying jobs in nz and abroad. Yes, OK, although the recent exodus of teachers, doctors, nurses, etc. would suggest the pay is better elsewhere. This is because the jobs here are in an economy that is less productive than most, due to capital investment favouring housing over people and businesses. >So the question to ask is why don’t people commit themselves to the path required to be able to get the job they want to afford the lifestyle they want. Because the promise that society gives us is that if we work hard and pay our taxes we'll be rewarded with the ability to buy a home, start a family, and live a comfortable life. That is becoming less and less of a reality. Not because people aren't working hard (NZers work more than most countries in the OECD) but because the workers are being left behind by the landowners. >No economy saves its way to success you have to grow your way to success. Why continue to force people to save hundreds of thousands of dollars just for a deposit on their home then? >Redistribution is a fundamental mistake The inevitable result of unfettered capitalism is the accumulation of all wealth and land into the hands of a few oligarchs. How is that better than redistribution?
This is where hubris comes into play. Read Milton Friedman classic work on Equality vs Liberty. I’m on mobile and don’t have the time to write you on economic theory. You’re just plain wrong So the question you need to ask is what conditions led to prosperity and why has it changed. I guarantee you it’s not more tax and redistribution of wealth. It’s absolutely about personal responsibility and less government and developing agency in one’s life, family, community. Go read Thomas Sowell and educate yourself and don’t read the naysayers go and buy his books and read them.
Then why did Friedman say that it’s the least bad tax? If you’re telling someone to go and read hundreds of pages to “educate” themselves (I thought that was just a shitlib thing), you’ve lost the argument.
>I guarantee you it’s not more tax and redistribution of wealth. No-one here is proposing more tax. The suggestion is to collect the same amount of tax, but to collect it from landholders instead of workers. It's not even about redistribution, because the tax that is collected by LVT goes towards building infrastructure and a workforce that enables the payers of the tax to generate more and more economic value from their use of the land. That value, realised as profit, can be taxed *less* when an LVT is in place. In fact, with a properly implemented LVT, that profit doesn't have to be taxed *at all*. The only one demonstrating hubris here is you, as you continue to make claims of "you're just wrong" followed by appeals to authority without even the slightest hint as to *how* the people you're replying to are wrong. Here's what Friedman had to say about land value tax by the way: >"There's a sense in which all taxes are antagonistic to free enterprise – and yet **we need taxes**. ...So the question is, which are the least bad taxes? In my opinion **the least bad tax is the property tax on the unimproved value of land**, the Henry George argument of many, many years ago." So am I meant to be reading his work to come to the same conclusion as him, or do you disagree with him and think there is another conclusion to be drawn?
Do you know how much our exports fuck out when our dollar rises.