Auckland University academic says taxing migrants could generate $1 billion a year for infrastructure and services

A poll tax to be levied against immigrants is being suggested by an Auckland University academic, who says it could generate $1 billion a year for infrastructure and services.

Mark Keating, a senior lecturer in tax law at the University of Auckland Business School, argues the Government should impose a flat levy on most immigrants to New Zealand to help cover the extra infrastructure and service costs from population increase.

“New Zealand is a desirable country with excellent infrastructure and public services,” he says. “Immigrants get to share in all these benefits, so why shouldn’t immigrants also contribute to them?”

Keating suggests a flat immigration fee of $10,000-$15,000 per immigrant would provide a source of additional revenue to offset increased costs. He says there would have to be exceptions for some categories of immigrants (such as refugees or those filling skills shortages).

“But imposing a tax on most other migrants in return for their right to share in everything New Zealand has built up would be both reasonable and fair.”

A 'poll tax' is a duty imposed on all, or a particular category of persons, to fund a specific government expense.

Keating said that in 2016, Treasury estimated the extra spending required on hospitals, schools, roads and other infrastructure to cope with population growth - which is largely driven by immigration - at $100 billion dollars over 10 years.

The Treasury figures included:

  • an upfront $1 billion on a Housing Infrastructure Fund to help local government pay for water, roading and other infrastructure
  • an additional $530 million over six years to be spent on expanding and redeveloping 30 schools

“These figures suggest that New Zealand’s existing population of taxpayers will shoulder a huge additional tax bill to settle and assimilate its record number of new immigrants,” Keating said, adding that no one appears to have quantified the increased health costs yet.

Immigration New Zealand statistics show that demand for New Zealand visas consistently out-strips supply, Keating said.

“The laws of economics dictate that the market would set a price for what fee would-be immigrants might pay to join our club.”

In the year to January, there were 89,670 permanent and long-term arrivals to New Zealand, excluding refugees, Australians and returning New Zealanders.

If Keating's suggestion were to be adopted this would mean that at $10,000 per arriving person, this would generate $896,700,000. At $15,000 per migrant, it would total $1.345 billion.

Keating pointed to other instances where the Government already imposes fees and charges on immigrants. In 2015 the Government reintroduced arrival taxes on non-residents of $22 to help fund tourism infrastructure. The Green Party continues to advocate a larger fee be imposed on visiting tourists to pay for environmental projects.

Australian tax academics are also calling for the re-introduction of a poll tax in Australia to compensate the Australian Government for the additional costs of enhancing the infrastructure necessary to cope with the new arrivals. Australia has recently imposed a partnership visa fee of AUD6865 on all spouses who qualify to join immigrants in Australia.

“At present, our Government simply gives away New Zealand residency - and passes the increased cost of building the necessary infrastructure on to current residents. Rather than continuing to be too squeamish about charging immigrants for residence or citizenship, perhaps we should embrace the idea and tax them appropriately.”

He acknowledges the negative historic association of past poll taxes on immigrants.

Under the Chinese Immigrants Act of 1881 New Zealand (like other former British colonies) imposed a “poll tax” on all Chinese immigrants. At its peak, the tax was £100 a person (equivalent to approximately $17,000 today). The poll tax allowed otherwise “undesired” immigrants to buy their way in to New Zealand in return for paying a fee to the Government. It was eventually scrapped in 1944, and the New Zealand Government rightly apologised to the Chinese community in 2002.

“Obviously targeting poll tax on racial grounds is indefensible,” Keating said.

“But shorn of its racial over-tones, what is wrong with taxing all would-be immigrants regardless of which country they come from for the right to move to New Zealand?”  

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59 Comments

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11

Could work. Should include some sort of tax on overseas property owners a well.

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14

We desperately need a Foreign Purchase Stamp Duty the likes of which Vancouver has brought in.

That will not work because our official records consider property owners on student and work visas as domestic owners. Even foreign buyers currently not on these visas will exploit this loophole to avoid any taxes of this sort.

While in favour of tax reform I'm inclined to say this may not be such a good idea.

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20

Well, people are at last starting acknowledge that immigration brings extremely large costs to our country. I have yet to see any convincing argument that they make any significant net contribution. So again I ask, what is the economic justification for this wholesale immigration.
In the absence of any sound reason for it, one is left with the strong suspicion that it has more to do with corruption serving vested interests or bolstering the political capital of the government. None of which are acceptable.
In the absence of any justifiable reason for immigration, the most rational way to solve the problems that it brings, is to stop it. Better to get rid of the problem than chase our tails trying to solve it.

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10

If you were able to interrogate them you would find most are "economic refugees"

They need a larger population to broaden the tax base so as to afford the rapidly approaching retirement burden. I don't necessarily agree with it, but that's the reason.

True.

Sacrifice the home ownership needs of young Kiwis to cater to the non-need-based welfare payout to older voters.

So you want to pay for the extra 100 Billion of dollars over 10 years that the immigrants need for extra infrastructure etc plus superannuation????

No, of course not.

Thats why I said "I dont necessarily agree with it".

The UN and Australian Productivity Commission have debunked the idea that a larger population solves a demographic bulge of retirees.

http://www.treasury.govt.nz/publications/research-policy/wp/2014/14-10

Well we haven't been in recession since 2008 like most countries. I doubt it's due to our great exports.
High immigration got us through a world recession but I think it's now time to turn off the taps as probably no longer needed.

Immigration was a millstone for us through the world recession Jimbo.

Apart from a spouse tax of AUD$6850, Australia also charges a "mature parent" tax of AUD$62,500 per parent

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12

Wow - making money out of the family reunification category. Gotta love the Aussies.

Well ... the spousal tax is tantamount to a massage parlour tax

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10

It's smart :) Good on them for doing it.

$69.000 tax on an oldie moving to Australia still wouldn't cover the costs on the Tax payer.

Am I missing something? The author suggests:

He says there would have to be exceptions for some categories of immigrants (such as refugees or those filling skills shortages).

and then;

In the year to January, there were 89,670 permanent and long-term arrivals to New Zealand, excluding refugees, Australians and returning New Zealanders.

So that number needed to also exclude those filling skills shortages (i.e., entering under the skilled migrant category) - which I think is a big chunk of the overall total.

So what is left are the HNW individuals who already bought their way in; the students (if considered as 'long term arrivals) and migrants coming in under the family reunification category.

I don't see many of the above, aside from the HNW individuals, as having the $10,000. And I think the bulk anyway are coming in under either the skilled migrant category or as students. And where many, many of the students are concerned - they were coming here to earn, not learn anyway!

Amazing everyone's complaining about shortages of workers when we're importing so many "skilled" people.

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12

Even more funny. We had no shortages when we were in a net immigration loss position. This suggests that that we have created inefficient bubble of people within the economy who are not productive enough to support themselves. When you are in a hole stop digging.
Another perspective is. Where is all this talk of labour shortages coming from. Listening to the government, they are telling us that it is verbal exchanges from employers who have the ear of the government. Talk about a vested interest. Of course they are going to say that, as it is great to have a large pool of people to draw from and competition for employment keeps labour costs down. Similarly all this talk of drug crazed NZ employees which totally contradict official department of labour statistics. This is a lazy short term approach by the government and I suggest that we all would be far better off shifting our focus to increasing the skills and productivity our existing labour force. That is what the smart countries in the world are doing.

Not to mention, anecdotes to counter Bill's anecdotes suggest the builders from the UK (in Christchurch) were far bigger users of drugs than the locals. Especially meth.

Chris_M reading the Star yesterday too?

"Painter Ben Creagh used to earn $43 an hour.
Now he can't get a full-time job unless he accepts the minimum wage of $15.25 - and he isn't prepared to do it.
(- he has three children.)
Mr Creagh's position is similar to many others in Christchurch, trade unionists say, where over-seas workers coming into the city for the rebuild are prepared to work for much less.
Employers have told Mr Creagh, 36, there are so many foreign workers willing to work cheaply, they won't pay more.
"It''s embarrassing. But basically, people aren't willing to pay what tradies are worth" he said.
Mr Creagh said he lost his job six months ago when work at the company which employed him dried up.

https://issuu.com/the.star/docs/117068cs?mode=embed&layout=http%3A%2F%2F...

We would be happy to see:
- one less black top Range Rover hooning round ChCh.
- one less spiv labour hire firm johnnie/jannie.
- one less contractor that subs all labour out (and labour payroll issues out) to said spiv labour hire firm
- one less immigration lawyer.
these guys probably add costs, way more costs, dollar costs, quality costs, work done twice/thrice costs, than the cut in wage rates "saves". Ever.

you get the drift. its not like putting folk like this out of work has reduced the cost of rebuild, now has it!
- had to be done to reduce the cost of the rebuild, now has it!

P.S. Imagine if these folk had been first taught by Gerry too - way too ironic.

No I didn't read it, but am not surprised.
This leads to an interesting question. Building costs continue to rise, so if wages are under such pressure, margins in the building industry must be very attractive.

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12

Or - and this is a totally rad suggestion - we could match the rate of immigration to our existing ability to provide infrastructure in Auckland.

Negative 4,000 per year? Who gets to go first?

The select cohort of boomers we were already planning to convert into sausages? Just accelerate the timing slightly.

Wow, what an utterly stupid idea.
We spend literally millions trying to attract immigrants (just look at some of the ad campaigns) and now we will be discouraging the very same people we are seeking to seduce. We risk not just turning some of the prouder and smarter people away (not because they wouldn't be able to afford the levy, but because it's bloody offensive and the very skilled people can always choose a place without such a levy, so the only people paying it will be those who are truly desperate and out of any other options - hardly the most desired new residents).

The problem is more fundamental though. Immigrants already pay high taxes. On average they pay higher income taxes and more GST in absolute terms than average kiwis. And not only this. They also actually pay for the benefits of infrastructure etc in the form of rents. The rental value of any property is directly linked to the infrastructure around it and the broader quality of the country's institutions. When a doctor moves in here from Boston and pays $700 per week to live in Remuera, the rent he pays reflects not just the quality of the building, but actually the quality of the area, the ifnrastructure, safety, etc etc. which all translate to the land value component of rent. If we truly want to capture the value of infrastructure we pay for, how about taxing these locational/unimproved land values instead of coming up with another tax on workers?

It looney tunes from an academic. Just kerb immigration if need be.
Its not money that is needed, we have a budget surplus. The shortage is in raw material and labour.

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15

Humbug - where do you think the surplus came from - by underfunding everything - including infrastructure - hospitals and schools and roads while importing more and more users

The typical cost-cutter manager case you see studied in business schools, where everything eventually comes home to roost because you failed to achieve real results and instead focused on short term returns.

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11

Looney tunes indeed. We just woke up that we have a huge immigrant problem caused by a dodgy 'education industry'. So the solution is - tra la - Just make em pay, and don't even offer education.
I suppose if we charged them $10,000.00 each and bought in a million poor folk a year we would make -umm umm - a big number. Magical.

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A good friend of mine worked in the PTE industry. Suggests the recent four-part Herald feature only scratched the surface of the rottenness in the industry and the exploitation of migrants going on, not to mention the abuse of the programs rife in terms of paying for a course - or back door visa - without bothering to attend or pass...

We are essentially charging migrants a $20k entry tax, we just call it a Diploma and give the money to private businesses.

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14

Yeah and the even bigger irony is that most of these so call private educational institutes are run by overseas organizations. Guess where most of the profits are going, yes that's right overseas.

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17

It is a big scam but NZ is the only country in the world where it is easy and relatively cheap to get residency. Everyone knows that, no one is coming here to study - it is a pathway to residency and cannot blame them for it is our government who is doing it to run its scheme (Can say ponzi scheme as by many).

Many are criticizing the national party government (rightly) so why not wait for election and vote them out (hopefully will happen).

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10

On the chance National stays in power, we still need to push for National to stop doing what's convenient for the "right now" and start doing what's good for more New Zealanders than solely their investor-voter bloc.

After 8 years of banging that drum - and being ignored - why do you think they're gonna change

When people get angry enough to protest and disrupt that their future is being sold out from under them, perhaps?

Well if this Immigrant tax was introduced two things would happen; The housing and rental market would plummet (Especially in Auckland) and the International Student market would also plummet as no student, no matter how wealthy their Parents are, is going to pay almost twice as much to study in NZ.

If the student is here for education then they don't need to pay for residency as they are going home when they finish their education.

Sounds too much like a very addictive to governments drug to me.

Who is going to run our petrol stations if these "students" don't come?

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12

John Key should be The NZ Poll Tax Minister to make amends for his disgraceful lack of governance for years allowing foreign speculation
in NZ housing with 0 taxation on their repatriated profits and 0 contribution to the NZ tax base.
I bet the roads are jammed & schools & hospitals overflowing & yet little I hear has changed in the years since I left my own country. Frankly NZ has a government of idiots

John Who?

Let the next generation or next immigrants pay the debt.
Soundingly responsible idea.

Yawn. Self service petrol pump....wait it already exists. Move on please.

We need an urgent referendum on the annual inflow of new migrants of each category to be admitted into the country....

Keating is delusional how are some of these people going to pay this "levy" ?

What he has not considered is that migrants from the Pacific Islands , India , Sri Lanka , Indonesia , The Phillipines and in many cases from China are poor people .

Maybe a lecturer in Tax Law, but obviously not a labour economist.

The horse has already bolted! The 300,000 Immigrants of the last 5 or so years have already created an infrastructure deficit of $100 billion dollars. Even if they had paid $10,000 each poll tax that is only $3 billion dollars.
Yes the GST take is up, yes the government is crowing how clever they are, and yes Auckland is buggered!!!
The $100 billion needed to upgrade the infrastructure deficit is a burden yet to be paid for.
The immigrants didn't bring any hospitals or roads or bridges or hydro dams with them.
This countries infrastructure has taken 3 generations 75 plus years to build and pay for and we continue to give it away to every immigrant who steps off the plane. A city of people the size of Rotorua is stepping off the plane every year and the NZ taxpayer is funding it.
The price of land has skyrocketed year after year while wages haven't gone up. Young and wage earning NZ'ers have had their futures pillaged while people like myself with large scale land holdings have become rich.
Yes we get taxed, yes we think we are clever and strut around like roosters and yes we are ripping off the rest of NZ who are too busy working and raising families to work out what is going on.
The biggest crime is that the media, the eye and ears of democracy, have been complicit with the ponzi scheme of selling NZ.

Oh god, imagine any NZ govt cutting back on immigration when they get hooked into mainlining money like this. On the surface sounds good, but I reckon it would just open the gates even further to NZ being over run.

if this policy was enacted what would be the outcome.
I would suggest greedy politicians would fling the doors open as w8de as they could to collect the income.
would it get spent on infrastructure no, more like pet projects.
its simple cut immigration to a level we can handle 15-25 K and adjust as the economy needs it within a 10 % margin.
this is the conversation we should be having

A libertarian argument here> the government doesn't own the hydro lakes, canals, roads, Milford Sound etc; the people do. Yet look how many foreigners earn a living driving tourists around these places.
https://mises.org/library/open-borders-are-assault-private-property

also

According to Longitudinal Immigration Survey: New Zealand (LisNZ) – Wave 1 the top reasons given for migrating to NZ are:
Relaxed pace of life or lifestyle
Climate or the clean, green environment
A better future for my children
Employment opportunity
Friendly people
Safety from crime
Join family members
Easy access to outdoor or sporting activities
Educational opportunities
Marry or live with a NZ spouse or partner
Political stability
Economic conditions
To study
Accompany family members
Other
Aspects Migrants liked most about NZ
Climate or natural beauty or clean and green
Friendly people or relaxed pace of life
Can achieve desired lifestyle
Safety from crime and violence
Recreation and leisure activities
Small population
Education system or educational opportunities
Having family here
Political stability and freedom or lack of corruption
Cultural diversity
Job opportunities
Good provision of services
Good housing
Lack of inter-racial, ethnic or religious tensions
Economic conditions
Other
None

http://www.stats.govt.nz/~/media/Statistics/Browse%20for%20stats/LISNZ/H...

The damage to our lifestyle is well and truly done (however).

--- oops
same post twice--

Yeah, there was no box for to launder the money.
You are probably a millionaire if you own a house in Auckland, guess who made you rich?
We sold our land and a peace of the country for money but it was a fair deal.
(macroeconomically)

just listened to nick smith talk about the RMA reform Bill, that his introducing to improve effeciency. his whole talk is about supply. He does not once mention demand, which to me seems strange.it's around the 7min mark if anyone is interested https://youtu.be/MxjWfQ_6gG4

The only honest thing National has really said about the housing crisis is "We don't want to see prices come down".

Rest assured they will do nothing to address demand - they're perfectly happy to see New Zealand bought out from under the next generations of New Zealanders.

Cynical, selfish behaviour...