The National Party is pledging that the average household will be $250 a fortnight better off with its 'tax relief' plan announced on Wednesday.
This is the announcement:
A family with children, on the average household income of $120,000, will be up to $250 a fortnight better off under National’s tax relief plan, National Leader Christopher Luxon says.
“New Zealand should be a country where if you work hard, you can get ahead. But after years of economic mismanagement by Labour, topped off by two years of rampant inflation, huge increases in interest rates, and a shrinking economy, most Kiwis are going backwards.
“In particular, the squeezed middle is being left behind. These are New Zealanders who work hard, sometimes juggling multiple jobs and family responsibilities, but inflation and high tax rates are eating away their incomes.
“National’s Back Pocket Boost tax relief plan will increase after-tax pay for the squeezed middle, making a family with kids, on the average income of $120,000, up to $250 a fortnight better off, and an average-income child-free household up to $100 a fortnight better off.”
National’s Back Pocket Boost increases after-tax pay for the squeezed middle from 1 July 2024 by:
- Shifting income tax brackets to compensate for inflation
- Expanding tax credits to reach more modest income earners
- Introducing the FamilyBoost childcare tax credit
- Increasing Working for Families tax credits for working families (from 1 April 2024).
Under National’s Back Pocket Boost, New Zealanders will be better off by:
- Up to $250 more per fortnight for an average-income family with children
- Up to $100 more per fortnight for an average-income household with no children
- Up to $20 more per fortnight for a full-time minimum-wage earner, and lowering the tax they pay for additional hours worked
- Up to $26 more per fortnight for a superannuitant couple.
“National’s changes to the personal income tax brackets are capped at $78,100 of income, meaning everyone earning over this amount will receive the same amount of tax reduction per week.
“Our plan is carefully targeted to ensure that those who will benefit the most are working New Zealanders. It’s about time they got some relief from Labour’s cost-of-living crisis and National will deliver that to them.
“It’s not right that someone on the minimum wage is so close to the 30 per cent tax rate, that if they choose to work longer hours, those hours are currently taxed at 30 per cent. National’s changes will mean a full-time worker on the minimum wage will only pay 17.5 per cent tax on extra hours worked.
“Tax relief will be delivered through a combination of adjustments to tax brackets, increases in tax credits for those on modest incomes, tax rebates for childcare costs and increases to Working for Families payments.
“National’s prudent, fully-funded and balanced tax plan also reduces major cost pressures faced by working people by removing some current and planned petrol taxes and reducing the taxes on rental properties which have driven higher rents.
“We will roll back Labour’s extension of the brightline test from an unreasonable 10 years – which sees mum and dad investment property owners treated as speculators – to two years, restore interest deductibility for rental properties to reduce pressure on rents, and remove new taxes on commonly-used digital services such as food delivery apps.
“National’s plan will make life easier for almost every New Zealander and is deliberately targeted to most help those in the middle who often feel overlooked. They deserve to keep more of their earnings and I have every confidence they will spend their extra cash more wisely than the Labour Government would.
“This plan sits alongside our wider plan to rebuild and grow the economy in order to lower inflation and interest rates, which will also help New Zealanders. National will restore discipline to government spending, remove red tape on businesses, build the infrastructure needed to support growth including 13 Roads of National Significance and four major public transport projects, and deliver the education and skills needed to support a growing economy.”
This announcement is from Finance Spokesperson Nicola Willis:
Boosting incomes for Kiwis the responsible way
National will provide meaningful tax relief to working New Zealanders with a plan which will be fully funded through sensible savings, reprioritisations and new revenue measures, National Finance spokesperson Nicola Willis says.
“While Kiwis have been feeling the squeeze and tightening their household budgets, Labour has continued its reckless spending spree and will spend 80 per cent more this year than in its first year in office.
“Too much of this spending has been wasted and not delivered improvements to public services, with crime increasing, hospitals in crisis and educational achievement declining.
“National’s fully-funded tax relief plan carefully targets the squeezed middle to give New Zealanders a meaningful boost directly to their back pockets.
“Our Back Pocket Boost tax relief plan does not require borrowing and will reduce pressure on inflation. It has been designed to be self-funding so that National can guarantee tax relief for working people, even if Labour leaves the government books in a mess, as is predicted.
“Our plan includes reducing spending on back-office bureaucracy and consultants, returning taxes raised on climate polluters to Kiwi families through a Climate Dividend, introducing a 15 per cent foreign buyer tax on the purchase of houses worth over $2 million, ending the commercial building depreciation tax break, closing the offshore gambling tax loophole and moving to user-pays immigration levies.”
National’s tax relief plan will cost a total of $14.6 billion over four years and will be funded by:
Reprioritisations:
- $594 million on average per year reduction in spending on back-office functions in government departments, excluding non-core and frontline agencies
- $400 million on average per year reduction in government spending on consultants
- $590 million on average per year Climate Dividend, returning taxes raised on climate polluters to Kiwi families rather than giving subsidies to large corporates.
Targeted revenue measures:
- $740 million on average per year from introducing a 15 per cent foreign buyer tax on purchase of houses worth over $2 million
- $525 million on average per year from ending the commercial building depreciation tax break
- $179 million on average per year from closing a tax loophole and ensuring offshore operators delivering online gambling to New Zealanders, pay tax
- $123 million on average per year from moving to user-pays immigration levies, excluding tourist visas.
“National will protect health and education spending and ensure that money goes from the back-office to the frontline. We will increase spending in health and education every year in government and ensure that this spending delivers improvements for all New Zealanders.
“Government agencies and Crown entities excluded from the overall spending reductions include the Ministry of Health, Te Whatu Ora, the Ministry of Education, the Education Review Office, Oranga Tamariki, Corrections, Police, Defence Force, NZTA and Kāinga Ora.
“These agencies will still be expected to reduce wasteful bureaucracy spending, but any savings will be recycled into the frontline. All other agencies will be required to find savings and reduce spending.
“People know they can trust National with the economy. It’s been a tough couple of years for New Zealanders, but National will rebuild our economy and reduce the cost of living so that people can get ahead.”
280 Comments
This house is on TradeMe for $1.5M. It's a very average home, in a very average Auckland suburb.
In 7 years time, if it appreciates at 5% a year, it'll be worth more than $2M.
- In 2024 - $1,500,000
- In 2025 - $1,157,000
- In 2026 - $1,653,750
- In 2027 - $1,736,438
- In 2028 - $1,823,259
- In 2029 - $1,914,422
- In 2030 - $2,010,143
This is what this 'tax' policy is about. The reintroduction of foreign buys to the market by stealth. Sure, it'll take 7 years for these average houses to get there, but that just gives us all time to build up our portfolios a little more. You can be sure that as soon as a house falls into that '>$2M' category, the auction rooms will be humming again. Place your bets wisely gentlemen, the game is on again.
If there is enough demand, it might increase the bottom-middle homes' value. I can see scenarios where a house worth 1.7m might be pushed up to 2 to let a prospective buyer into the market from overseas.
Who cares if foreign buyers purchase property in NZ. Tax overseas investment with stamp and capital gains, not this wishy washy arbitrary value on a property. Why 2m exactly?
This is an absolute winner - Luxon will certainly garner more support from the squeezed middle. The plan is to give tax relief to businesses and earners by broadening the tax base. Brilliant stuff!
National also gets my vote for gradually reinstating interest deductibility instead. This should keep the pressure on housing investments for a bit longer.
National also says it will keep interest deductibility at 50% in April 2024, 75% in April 2025 and reinstate full deductibility April 2026 onwards
Didn't Labour already announce something about removing the Commercial building depreciation tax break?
https://www.interest.co.nz/property/123622/legal-and-business-experts-a…
No way that'll happen because Luxon is banking on those taxes coming in ($740m per year) and paying for bracket adjustments.
Remove the ban entirely and you'll see foreign buyers reducing their tax bills to zero by spreading huge investments across multiple properties, each worth less than 2m.
"National would roll back the foreign buyers ban - which Labour put in place in 2018 - and apply a 15% tax for purchases on houses worth less than $2million (a National press release said more than $2m but this was incorrect)."
Care to retract your silly comment GV?
If a foreign buyer offers $2million+ for a house, does that mean it’s worth $2million? I’m sure there will be some sensible way to define a home’s value 🤞 , but I can also see real estate agents listing homes over $2million that would otherwise sell for under $1million to qualify for the foreign buyer market. Hope it doesn’t somehow make things more unaffordable for the lower tier/entry level homes.
Our economy has more in common with Caribbean Islands being overly reliant on agricultural exports and foreign tourism to pay for everything needed a modern society requires.
We might as well go all-in and make our housing market a conduit for money laundering, capitalising on other "economic strengths" of NZ i.e., real estate, mortgage banking, property management, etc. [sarc]
Wouldn't it be nice to open up our core domestic sector to the export markets?
Stuff are reporting that is a misprint "National would roll back the foreign buyers ban - which Labour put in place in 2018 - and apply a 15% tax for purchases on houses worth less than $2million (a National press release said more than $2m but this was incorrect)."
Could someone please confirm which it is? I like the <$2M still covered by the FBB and >$2M taxed at 15%. That would seem to cover off everyone's concerns.
National's detailed policy statement on its own website says:
National will:
- Keep the foreign buyer ban for all homes worth less than $2 million (the average house price in New Zealand is $888,999 as at July 2023)
- Introduce a 15% foreign buyer tax for purchases of homes of $2 million or more by people who do not hold a resident class visa in New Zealand
- Ensure sensitive land tests would still apply.
Yeah I almost feel guilty saying it because "property man bad" but most of this seems fairly sensible (at least on first reading, admittedly I'm reading it while stuck in a boring Zoom call pretending to pay attention).
If I've got to pick between $3 per week in cheaper kumara or this, it's an absolute no brainer.
Sounds good, may be too good ? National will win on these policies, for sure. Whether they will be able to deliver on these policies in full within the first year of their governing, we shall see. Interest deductiblity and tax bracket change are the key attractions.
better is a moot point, sure Labours as flaky as usual, but giving property investors expensive tax relief will just thrust house prices and rents even higher, which is where all the financial hardship is, in impossibly large mortgages and in impossibly absurd rents...
This is what Treasury has to say about the removal of interest deductibility for residential investors:
We expect the removal of interest deductibility will have a material impact on house prices. Without this tax change we would have forecast an increase in house prices of 34% over the forecast period. Due to the removal of deductibility we revised our forecast to around 14%, a downgrade of around 16%.
If over-priced housing is your concern, that policy needs to stay.
So they removed interest deductibility and house prices went up by more than 34% anyway. So much for Treasury forecasts. The only thing that matters to house prices is the cost of credit, and how much borrowed money is flooding the market. However for all those stuck living in motels for the last 6 years, a flood of investors back into the property market (especially for low cost existing housing) is going to bring much needed relief.
No it tends to go the other way ie . Impact spreads up from the bottom
Anyway, buying a house is sadly a forelorn hope anyway for low-middle income earners, and nothing Labour has done or is proposing was going to change that. Too bad. I and a few others in the advocacy space really tried…
Not really, it will just open up a gap between $1.9m and $2.1m. Lots of countries, including Australia, have taxes that kick in or go up at a certain price point. All that happens is that prices tend to stick below the min or go above it. ie. someone bidding for a $1.75m house is not going to pay $2M so they won't be in the auction, and someone wanting to buy a $2m house is probably going to start looking at around the $1.9m range and then offer more. They are not going to be looking at $1m houses and offering $2m, why would they when they can simply buy a $2m house that is much nicer.
It's so easy to just look at the National party website for the source of truth. You could have done that quicker than typing the message above.
https://assets.nationbuilder.com/nationalparty/pages/17859/attachments/…
Tax free threshold is problematic as you have to still find a system to verify income, especially for application for social welfare i.e not employees but self employed, a large group would fall under the threshold. Compliance risk would be a real issue in this space.
Agree, and its a policy in the right direction. To help middle aged professional workers by putting cash into their pocket vs Labours plan to give money via different schemes to the poor non-workers which goes directly to fund their landlords.
Encourage people to work and contibute.
I would eventually expect more than 1,650 to be sold to foreigners, but also for the value to be much higher than 2 million for many of them. Foreigners who come often want their own air strip, pier & helipad to go with their ocean & mountain views. Would not surprise me if a handful go for 50-150 million each year. Only takes 30ish mega mansion hideaways to make the expected tax take.
The main building alone looks to cost 20 million in this build. https://www.nzherald.co.nz/nz/billionaire-peter-thiels-wanaka-mansion-p…
land cost, ancillary buildings, etc to cost extra.
because they want the house and if your paying 20 mill.... the 3 mill is unlikely to be that big an issue --- and in a lot of the countries that people come from there are already such taxes so its not exactly a new thing to them - and its unlikely to be their only home so unlikely to be a pure ruse to get citizenship -
She has always been quite good. She lives around me and I have chatted to her quite a few times during her out and abouts. Would far prefer her to Luxon TBH. Only bad thing about her is she doesn't really listen too much to you talking, just likes to blah blah over the top of you, but what politician doesn't. She has a sharp mind and a quick wit, very similar to Ardern but just from the other team.
I don't agree, I have also worked in Welly for a couple of decades (in govt for a large part) and those consultants can just come on board at wages they are actually worth. For the other dead-weights good riddance. As for the Govt employees actually hired to do a job... I can only hope they keep their heads down until Labour get back in.
Something smells fishy here. "Please consultant come and work full time for us to deliver a 1 year project... then you can just sit around and do nothing for the next 10 years until we need you again" - that's a much less viable option than having a consultant come and deliver a bunch of stuff for a year when its needed, then move onto another role where they do the same. Even if you are paying them double what you would a permanent staff member, you still win. AND you end up with a large pool of consultants that are multi skilled, instead of a whole bunch of layabout workers who barely do any work Large government changes often work in projects where the staff are only needed short term, then they deliver and move onto another agency who has another new project. Maybe its just me, working in IT that sees real value delivered by contractors/consultants, who then move on to do similar things on other big projects in other government agencies.
What I see in government is a lot of full time workers, about 30% of them are absolute slackers who, if they come to work, barely achieve anything. The consultants/contractors are often the most productive of the lot, cos they had a wage targeted at a specific outcome. Yes, there are some who are also useless, but they don't often last long as consultants and can be got rid of at the drop of a hat. Whereas trying to get rid of full time staff in government who are unproductive, almost impossible. Particularly if they are PSA members.
Corelogic state here that 60,859 properties were sold in the year to February 2023.
If all the properties included in this tax take of $740M were sold at $2M, 2466 properties would need to be sold to foreign buyers each year to raise $740M in tax. 4% of the total sales.
Statista states here that in June 2023, 28% of residential property sales across NZ had a sale price of over one million New Zealand dollars. 28% of the total sales across the year is 17,040 properties sold above $1M. That 2466 now represents 15% of the total.
What proportion of sales occur above $2M? In this article, OneRoof have a table titled 'Shrinking Fast: NZ's $2m-plus Sales'. The four most recent quarters sum up to 4,244 sales above $2M. Assuming again that the sale price is $2M, that's 58%.
Acknowledging of course that a number of sales will happen at a higher price point, pushing the % down, that's still a shockingly high number. Particularly when you consider that these properties represent the best land that NZ has to offer.
Seems like the backbone of this 'redistribution' consists of flogging off the tastiest cuts of the country to foreign buyers. Same old story isn't it.
Statista states here that in June 2023, 28% of residential property sales across NZ had a sale price of over one million New Zealand dollars. 28% of the total sales across the year is 17,040 properties sold above $1M. That 2466 now represents 15% of the total.
But 2023 sales numbers are way down on historical averages. It's reasonable to assume that sales will pick up at some point, and eventually prices too. So that 15% could easily be 5%.
Nats are way to the right now and partnering with Nzf and Act who are even further right.
It will be 4 years of making money for the elite business owners, higher property prices, more power for duopolies and and more take home pay and perks for the property owning middle class. I wouldnt want to be on benefits, in minorities or renting for a while... gonna get tough.
Foreign property ban/unban is not worth even talking about.
a) It equated to less than 3% of transactions
b) Did anyone notice the price decrease when introduced in 2018? Or did we see prices going up another ~100% to the peak while Kiwis were selling houses to other Kiwis?
The $250 per fortnight more for an average family with kids looks to be seriously stretching it noting it seems $150 of that will come from daycare subsidies.
It is $250 a fortnight for an average family paying daycare costs. No doubt that is a band that could do with more support, but I don't think you can can take costings based on that group and say it applies to the 'average family'.
It looks to be only $50 bucks a week for a family without daycare costs that can be subsidised...
Yea that's a disappointment. You need two incomes to get a house in Auckland, but to get a mortgage you're going to be over that cap. I'd suggest this is a bit wonky on National's part, and effectively results in a geographic equity issue.
There's some smart things in there, but this sticks out as poorly thought out.
In my experience with a student renting in Welly a few years ago,one of the students allowances went up by $50 a week...funnily enough,all the rents miraculously went up by the same amount at the next intake of students in to the city...child care centres will be rubbing their hands together.
Top 39% tax rate to stay as it is according to the press release - interesting. And a boost for working for families. A very 'Labour lite' plan.
Not a lot of difference between them. The low income benefit system just pushes more Kiwis into the benefit poverty trap, where when you consider the abatement rates on the benefits, there is little or no motivation to increase your income. Between ever increasingly unaffordable houses and the low income poverty trap, there is no hope for young families starting out in New Zealand. Their best hope is to leave New Zealand because it is never going to get any better what ever the political party in power.
- Quoting everything "per fortnight" to make the numbers look bigger
- Brightline returned to 2 years
- Foreign buyers allowed back in
- Interest deductibility restored
What a joke - the "squeezed middle" trying to buy their first home will be priced out completely. At least it works well for landlords like Luxon and his mates.
It could have the opposite effect. Reducing the brightline test will allow purchasers who have bought in the last 5 years to now sell without getting hit with CGT. I'm sure there are plenty of those investors keen to get out given the increased interest costs. NB rental returns are typically around 3% of the property value whereas interest costs are closer to 7%.
Heck yeah. There are a lot of people who bought pre-Covid who are sitting on good capital gains, who are dying to get out, so once they are free to do so listings will go up. And increased supply means lower prices, although there should be some offsetting increased demand from investors coming back into the market for existing housing. So ultimate effect is a toss up.
Treasury modelling of the impact of limiting interest deductibility for investors:
We expect the removal of interest deductibility will have a material impact on house prices. Without this tax change we would have forecast an increase in house prices of 34% over the forecast period. Due to the removal of deductibility we revised our forecast to around 14%, a downgrade of around 16%.
Unfortunately, or fortunately, however you want to see it we do need private investors to provide rentals.It’s been clearly shown with this Govt that the state can not hope to provide enough housing for all our people who need it. Whether we like it or not we need some kind of incentive for those private investors. The key here is to have regulations in place that insure the standards of rental accommodation is good.
Or we could limit population growth by restricting migration to those people who are truly skilled, but no, NACT are going to repeal even the minor wage requirements that are in place now.
Public or private housing, there's no way we can provide enough if the borders are open wide.
I dont disagree on the investors and rentals, although id rather see large institutional owned rental stock. I was talking about speculators.
The Facebook property investors group comment on this - the flippers will be back - all due to the brightline. Is that what we want ? Increasing house prices and filling someone's pockets with tax free capital gains ? It's a shit show.
God you really are drinking the Kool-Aid being spewed out by the right. I don't like the attempt at cultural realignment that Lab/Green are pushing but the housing policies were something I could get behind (even though they don't go far enough IMO).
7-house-Luxon and his wealthy mates will be frothing at the thought of making all that money.
“We will roll back Labour’s extension of the brightline test from an unreasonable 10 years – which sees mum and dad investment property owners treated as speculators – to two years, restore interest deductibility for rental properties to reduce pressure on rents..."
A bit convenient that this is not in the bullet points. There is a massive tax cost to reinstating the interest deductibility.
They almost had me excited but not with this!
National appear to have a strong candidate in Ilam, so the initial polling does not look that good for Raf Manji (either running second or third to the National candidate, so this policy will not help TOP. Raf might need to eat a "dead rat" and approach Labour to win the seat, as I can not see TOP getting to the 5% threashold.
Because it is a business expense, even if you only owned for less than 2 years. Thats how the tax system works for every other business. Or do you think supermarkets should only be able to sell fruit and veges that they bought 10 years ago in order to be able to deduct the cost of their finance?
If you sell the assets in the business you will pay tax on any gain of those assets.
If you had 10 houses in your business and you sold it as a going concern, you wouldn't pay tax on the business sale. In reality the value of this should be based on a multiple of your profits, which is where the housing as a business model falls to bits, it's all about capital gain.
They do pay tax on sale of an asset, if they purchased it for the intention of resale. Like every other business. If you buy a house, do it up, sell it again, you pay tax on the profit. Big difference from taxing people who rent out their own home, and then want to sell it later. Or who buy an investment property, interest rates double, and they are forced to sell it.
Every other business pays commercial rates on borrowings. Every other business is about making a profit up front, not waiting for its assets to increase in value while actively loading debt onto said assets. It's not a level playing field.
The intent and modus operandi is not comparable. The tax regime should not be comparable.
National will support seniors by: • Keeping the Winter Energy Payment for all superannuitants • Increasing NZ Super payments every year we are in office • National’s Back Pocket Boost will also deliver a couple receiving NZ Super an additional $680 a year, or $26 more per fortnight. This is because Super is indexed to the after-tax average wage. National’s tax reductions will increase the value of the after-tax wage, meaning Super payments will increase too
14,000 -> 15,600
48,000 -> 53,500
70,000 -> 78,100
All else unchanged.
https://assets.nationbuilder.com/nationalparty/pages/17859/attachments/…
It's obviously better than nothing, which seems to be the alternative. These tax brackets have been fixed since October 2010 however, and since then there has been 36%+ CPI inflation. If the brackets were adjusted to the actual inflation that had occurred over that period, they would be:
14,000 -> 19,020
48,000 -> 65,200
70,000 -> 95,000
Interestingly that second tax bracket would actually be pretty close to the 70k magic "rich prick" threshold. I also note that National are not proposing to legislate that the tax brackets are indexed, but instead promise to "review" them every three years. Still, better than nothing I guess.
$740 million from a 15% tax on house sales on $2 million to foreigners equates to the sale of 2467 house sales to foreigners at $2 million per house. OK there will be sales over $2 million so a bit less, say 2000 houses. Well when we have chronic homelessness that is 2000 more families living on the street after all the existing kiwis shuffle down the property tree. In other words we will all be forced into lower quality home while foreigners move in to the top of the tree.
I notice that they did not say brand new $2 million dollar houses. That at least would have added to the housing supply, but that is not what National is about. they will be doing everything that they can to increase house prices. Luxon did not hang on to his 7 houses to loose money.
I am sure that this will also become a loop hole for getting into the country. Here temporarily buy this "$2 million?" dollar house and pay the $300000, sell it back to us in a year then you can do what you like.
It all comes out in the wash aye. Residents who buy in the $2m+ range, might consign themselves to the $1.5m - $1.9m range when outbid by Overseas buyers. Those in the $1.5m to $1.9m range are then outbid and lower their expectations. It all "ladders" down until the lower quartile are pushed out completely, or bidding becomes too high for landlords to purchase. Then you have a shortage of rentals.
Are we short of $2m+ starter homes, are we?
Meanwhile, Labour thinks minimum wage earners should pay 30 cents in the dollar on some of their income, because they won't change the tax brackets between now and 2026 to adjust for the huge inflation in living costs they've presided over. Setting a pretty low bar for what is and isn't progressive, isn't it? National look positively visionary by comparison.
Classic National. Hock off the country for tax cuts.
What is this climate dividend? So, polluters are taxed to pay for tax cuts. Basically NAtional has thrown the towel in on climate change. Hey, lets just build more roads and then complain when floods occur every year.
'National will protect health and education spending and ensure that money goes from the back-office to the frontline'.
They go on about back office functions, but without them how does the frontline work. How are things bought and paid for, how are people paid. etc
Dropping the 20 hours free ECE is going to be huge for a whole lot of families. I have three kids under four. Under National, even after tax cuts, we will be about $100 worse off every week. It's going to hurt. Whether it scares young families into voting for Labour is another thing. So far it hasn't been well reported by the media but it is by far the most significant service cut in terms of the number of people it affects.
National's "Back Pocket Boost" is the heading in their policy document ?
I can definitely feel it in the back pocket, and it doesn’t feel like a boost.
It feels like we are going back to a plan that didn’t work through the 2010’s. There is nothing here that will make my kids able to afford to live in New Zealand.
If 7 house Luxon came out with a statement "my properties are all paid for and I do not benefit from re-instating the interest deductibility or I'm selling my rental properties so the interest deductibility does not benefit me personally", it would pass the smell test.
I'm sure 4? house Hipkins and other Labour party property investors/speculators will be quietly clapping.
I'm in favour of interest deductibility as it is deductible expenditure in the majority of business's.
Disclaimer. No rental property here
It depends on whether National end up borrowing for these tax cuts, which I am sure they will. If they borrow money to give to me to spend then yes that will be very inflationary. I'll still vote for it though!
I guess it also depends what the money is spent on. If we all use it to buy houses off each other like National's last tax cuts then that isn't CPI inflation.
So it's not inflationary when the government takes it and vapourises it for little gain or improvement in services, but it is when people are allowed to spend it on themselves?
But they are announcing *new* taxes to mostly fund it. They are not really reallocating existing spend to pay for it fully. So in this case, your point is moot.
So again: how is it inflationary? Someone spends the money either way.
Or am I being asked to believe that when Labour does something like piss away $350 multiple times to the general populace because they haven't got any actual ideas to deal with living costs spiraling out of control that it isn't inflationary but that it suddenly matters now when it's National announcing policies?
So, to fund this we as a nation are going to have to sell at least 2,500 $2M+ properties per-year to foreign buyers.
How many do we sell currently, and how is that tracking with any projected price falls? (I don't know, could only find the data for $1M+ in my brief internet search).
Rents don't reduce on an individual level, they reduce on aggregate. In my area you can rent an older 2 bedroom property for $420-$450 a week. However, a new build 2 bedroom townhouse in the same area rents for $500-$550 a week. There is currently a huge shortage of the older and cheaper properties, and a large supply of the new properties. So people are being forced into paying $500+ a week (or going into a motel while waiting to be housed by Kainga Ora). If there were more investors owning older properties in the market, more people (especially low income people) would be able to find a $450 a week property and thus save themselves $100 a week, and rents on aggregate would reduce. See how that works?
"Key facts. In the year ended June 2022 compared with the year ended June 2021, measures of household income showed: average annual household income from wages and salaries increased from $72,794 to $79,128 (8.7 percent) average annual household income (gross) increased from $111,168 to $117,126 (5.4 percent)23/03/2023"
Luxon claims the Average household income is 120K, but only $79k of this is from wages and salaries. The other $38 K id form investments etc, most likely the biggest portion of this is the 10 % wealthy, the bottom 50 % not earning hardly any of this.
Once again we have left and right talking about a different middle.
Is it perfectly policy? Absolutely not.
Are there issues? Unequivocally yes.
Do property investors benefit? Unfortunately, yes they do.
However, compared to Labour's miserly offering of slightly cheaper cabbage (with a more expensive drive to shop for it) this is like comparing 1960s Muhammad Ali versus that chubby 40 year old from your office who's signed up for a corporate fight night event ... as in 'no contest'.
Surely unless Luxon decides to handstand walk on to the debate stage with no trousers on while screaming profanities (and even then ...) this has sealed the deal for National.
Lower income for already low income public or taxpayer funded services from cancelling Fair Pay Agreements
Tax back for middle income earners
No extra tax, increased capital gains and 'partnerships' for affluent private equity to fund expenditure
Major CO2 polluters lose subsidies, putting their business models and their unionised employees at risk
National's strategy is to enrich some wealthy by distracting some workers by fiddling around the edges and quietly pulling the rug out from under Labour's voter base under the guise of helping the 'squeezed middle'.
Meanwhile the property industry, building contractors, farmers and private equity get the cream while environmental polluter risk is socialised.
Losers here would be disabled beneficiaries, single mums, Fair Pay affected workers, the young and future generations, ecosystems and the undisclosed back office functions that keep things functioning that National seek to save $598m but don't want to be clear on because it's politically sensitive.
This is how businessmen run the country like a business apparently.
You sell everything that has value or generates income (who cares what country the buyers are from?) and then you can afford to reduce taxes for a few years.
What happens after that? Who cares. The businessmen are rich, that is the point of business.
It's not awful but not great - would be more interesting to use the middle income instead of average. And let's update the "mum and dad" housing investors to "nan and pop", or not, my generation aren't having kids apparently.
Anyway. Assuming these cuts are funded entirely by the proposed revenue streams, there's $3.1b of lollies here that puts our country in the exact same net position??
If I were Labour I would have vowed to match National's total tax cuts but given none of it to property investors and all of it to the people. I would have vowed that before even seeing National's tax cuts. That would have been a vote winner, almost 50% more tax cut.
Unfortunately Labour have moved way left of centre since Jacinda left, now it is only about people who don't work.
I think if anything Labour have been moving to the right. There's a reason Parker gave up his Revenue portfolio - he fundamentally disagreed with Hipkins ruling out a CGT or wealth tax. I can't imagine a National Minister resigning in similar circumstances - integrity is unheard of. Hipkins was gutless. If they're going to lose the election, at least go out with a bang.
I’ll be voting ACT purely on the basis this country needs a cultural reset.
But the high fives and butt slaps for a blue team win isn’t going to change the global asset reset that is about as inevitable as gravity at this point.
Those debt grenades will go off and the blast radius will be far reaching and yes that includes housing.
How depressing. While I have been disappointed with Labour, there are some areas where I think they made some positive policy changes that when combined (along with OCR increases) have managed to turn the housing tide.
My partner and I are in our early 30s and are lucky enough to own a home. That being said, we are both on six figure incomes with no kids - and that has become what it takes to do something that used to be ordinary (assuming your parents can't help you). We have friends who for the first time in their adult lives see home ownership as a real possibility. Well, that was short lived. All of these changes will just further entrench the intergenerational wealth gap, with the kids of the 'mum and pop' investors well set up, but for your average young person who can't rely on their parents for help - well, you better hope you're earning at least 200k a year, and don't worry about starting a family - we can just import everyone we need. The plan is to:
- reinstate interest deductibility for landlords.In 2019, investors claimed 3.5 bil in deductions, and half of all mortgages extended to landlords was interest only. This has been the single best thing Labour did while in power. There's no surprise house prices have fallen along with the proportion of sales made to investors. In fact, investor activity was at record levels when house prices were exploding in 2020/21.
- go back to the immigration free for all and open the door for foreign buyers (I'm also alarmed at their expected sales volumes)
- roll back long-needed tenant protections (e.g. bringing back no-cause terminations and removing rules that allow fixed term tenancies to turn into periodic tenancies)
- change the bright line test back from ten to 2 years.
The foreign buyer tax is 15%. A 300k hit for a $2m house. I can't see more than potentially a few dozen foreign buyers a year willing to take that sort of hit. New Zealand isn't the draw it use to be. On this point Grant Robertson is right for once. The numbers don't add up.
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