- Misleading assumptions undermine the plans credibility
- International treaties likely make plan impossible
- Results in tiny pool of potential overseas buyers
The centrepiece of National’s tax increases that’s been booked to pay for half their tax cuts is collapsing faster than a house of cards, Labour Finance Spokesperson Grant Robertson says.
“National is banking more than $700 million a year – nearly half of its revenue initiatives – from a 15 per cent tax on foreign home buyers. But their numbers are based on incredible assumptions about how much this will raise,” Grant Robertson said.
“Before our foreign buyer ban in 2018, an average of 4120 homes were sold every year to foreign buyers. National’s plan assumes 48.5 percent of those homes would be sold for over $2 million, despite homes of that value being only five percent of the market,” Labour’s Housing spokesperson Megan Woods said.
Overseas Investment spokesperson David Parker said our international tax treaties could likely exempt many key markets from National’s policy.
“New Zealand has tax treaties with 40 countries and territories, many of which would be excluded from National’s tax being applied to them,” David Parker said.
“National have assumed the number of foreign buyers buying a $2 million home and paying an average of $300,000 in tax will reach 70 per cent of 2018 levels when there was no tax and no restriction on the number of homes. That’s extraordinarily optimistic.
“It’s impossible to see where all the buyers who could be covered by their tax are coming from. Given they’ve exempted Australia and Singapore they’ve already eliminated 27 per cent of the foreign buyers from 2018.
“It gets worse. New South Wales, cited by Nicola Willis today, recently had to stop applying their foreign buyer tax on a number of countries after it was deemed in breach of international treaties Australia is a signatory to – including New Zealand.
“New Zealand has a range of tax treaties with places like the UK, Hong Kong, Japan and Canada, it’s possible a significant number of other places could be excluded.
“This is just for tax treaties. National must release their legal advice on the implications for trade agreements so it can be scrutinised.
“Our understanding is that once their changes are made, the existing carve out in trade agreements couldn’t be retained under trade rules. As a minimum it will be open to dispute,” David Parker said.
“Given these changes are the vast bulk of National’s revenue raising it’s impossible to see how National’s costings add up. Yet again they have a fiscal hole at the heart of their economic plan,” Grant Robertson said.
“What National’s fiscal hole will mean is that they will be forced to make even deeper cuts to public services. Based on their record, New Zealanders should be very afraid of what that means.
“The choice this election is clear. Huge cuts to public services under National or targeted cost of living support and protected public services with Labour,” Grant Robertson said.