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TOP's Raf Manji on UBI, land value tax, monetary financing and more

Public Policy / opinion
TOP's Raf Manji on UBI, land value tax, monetary financing and more
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By Raf Manji*

When I last wrote a series of articles for Interest.co.nz back in early 2020, my concerns were centred on whether the Reserve Bank would manage a Quantitative Easing (QE) programme to support the real economy and not boost asset prices, as previous programmes had done. The evidence from the post-Global Financial Crisis (GFC) response was clear that misdirection of new investment would benefit those with access to capital, and able to enjoy the fruits of low interest rates. 

As early as August 2020, we could see that house prices were starting to take off and that the economy, far from collapsing, was operating at a reasonable level. Added to that, domestically constrained savings and deferred consumption was starting to fuel demand for housing and other goods such as cars, boats and home renovations.

The financial authorities did not respond, seeing this as a good outcome, and an example of the wealth effect at work. In the 18 months since the emergency COVID-19 rate cut, the median house price has risen by 36%.

At the same time, there are enormous pressures at the lower end of the socio-economic scale, with increasing rents, a huge public housing waiting list, more children in benefit-dependent households, unmet demand for foodbank support and increasingly precarious financial situations for many, even with a low unemployment rate.

The Labour government, now in its fifth year in charge, has not addressed the structural problems, with the Prime Minister even ruling out a basic Capital Gains Tax for the lifetime of her rule. So when I was approached to consider taking over the Leadership of The Opportunities Party (TOP), I figured it was now or never. We simply cannot wait any longer to rebalance the system and anything I could do to support that was worth the effort. 

As a discussion starter, I posted up on Twitter FIVE policy areas I was interested in exploring and bringing to fruition: UBI (Universal Basic Income), LVT (Land Value Taxation), TCP (True Cost Pricing), OMF (Overt Monetary Financing) and NSC (New Social Contract). The first four ideas deal with the basic pillars of a society: income, taxation, environment and money, all underpinned by a deeper understanding of citizenship. 

Anyone who has heard of TOP probably knows that Universal Basic Income is its flagship policy. Redesigning a welfare system to support all people, whether in paid work or not, is about recognising the value and dignity of the individual and all the various contributions people make in their lives. It acknowledges the complex needs of modern life, the uncertainties, as we have seen with Covid-19, and a more precarious system of work.

It does away with the unending cycle of bureaucratic intervention and paperwork that simply shouldn’t be necessary to provide basic support to all and incentivises work by removing abatement issues for those on lower incomes. It also directs that support for health and wellbeing issues, such as disability, learning support and specialist care are properly provided and funded through the health and wellbeing system. 

Some of the questions we often hear in response to a UBI are how will you pay for it and why do well-off people need it? These questions are answered by a well-structured and fair tax policy, which taxes housing properly. If you are well-off the extra income you receive through a UBI will be taxed back through housing, which is where most of our wealth resides (since Labour came into power, house values are up over $500b!).

There is a debate on how best to tax housing, whether the equity in it (TOP’s current policy) or the land itself. I’ve always been interested in Land Value Taxation. It’s an idea that has been around for 150 years and implemented in various forms around the world.

In recent times there has been somewhat of a renaissance, given the huge increase in land values. The Tax Working Group looked at it but in only in a very cursory way. I like the ease of collection, the fairness and efficiency of it. When people talk about house prices going up, what they actually mean is land values increasing. It’s a policy area that seems to have appeal across the economics spectrum. Whatever the final result of the policy process, our outrageously over-priced housing system cannot continue on its perilous path. 

On an equally perilous path is our environment, with degraded waterways, lakes and rivers. Climate change continues to impact, through increased heat, drought and floods. One of the major challenges around managing the use of our environment is the lack of pricing for negatives impacting on the ecosystem.

Pricing externalities has long been a proposal from ecological economists, in order to more accurately inform consumers as to the true cost of production but also make sure that polluters pay and pay properly. This is part of TOP’s Biodiversity policy framework and is something that consumers, investors and regulators will increasingly demand to see.

One example of this could be a methane tax on cows, which would be recycled into research and actions to offset the methane. Whilst farmers might initially resist this, it would be welcomed by all stakeholders, provide targeted funding for improvements and get ahead of the regulatory curve. 

Underpinning the three big issues is our monetary and financial system. The system has been directed at high-leveraged financial asset investment for far too long. One would have hoped that the carnage and wreckage of the GFC would have seen a change to lending practices but the monetary and fiscal response was predicated on boosting financial markets and housing, instead of a relentless focus on productive investment such as public services, infrastructure, research and innovation.

One proposal that came out of the GFC was coined as Overt Monetary Financing, an all-encompassing term calling for a shift in the monetary and fiscal framework from a focus on monetary policy, austerity and debt-to-GDP ratios towards outcomes in public spending. With inflation still the overriding indicator, governments could fund public services and investment as required without too much concern over debt levels. This is both a question of how governments fund themselves, as we have seen with QE, but also how a more flexible monetary and fiscal policy should operate: should it be for the interests of capital or for better outcomes for people?

And what of the people? What is their part in all this? One only has to look overseas to see levels of anger and frustration rising, as people sense something is broken, the feeling that the implied social contract is no longer working. Get a job, work hard, live a good life, participate in your community…how can you do that when you can barely afford to live, or when you feel the system is completely out of whack? New Zealand is not immune from the social challenges we’ve witnessed in the US, UK and France in recent years. I believe it’s time to re-think our social contract and put in place some foundational support to enable that. 

As well as rebalancing our major policy frameworks to create a fairer playing field, I think it’s worth discussing a new National Civic Service model. This would focus on four key areas: civil defence, civics, conservation, and community. These courses would be short in length (one to two weeks) and accessible at any time. They could also be offered to new arrivals. We already have the organisations who could deliver the courses and the funding would be an investment in our citizens and residents, and a way of building a stronger sense of belonging and social cohesion.  

When you put all these proposals together, I believe that a sense of direction and purpose emerges. There will be many challenges and pressures ahead. To address those, we need new ideas, fresh debates and a clearer vision for Aotearoa New Zealand. Because in the end, if you don’t know where you are trying to go, any road will take you there. 


*Raf Manji is leader of The Opportunities Party.

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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

258 Comments

TOPs policy can be summed up as stealing from those who worked all their lives to provide a home for their families to give a handout to those who cant be bothered getting out of bed.

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18

Oh god, not one of those. I predict some sharp comments coming your way. 

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36

Uh , scary ..

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2

Sounds like you're describing my landlord.

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59

Buy your own house then. Failing that get a tent.

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6

More people would be able to buy their own house if LVT played a part and productive hard work was rewarded instead of just folk sitting around on their ass-ets.

The status quo of simply transferring younger and poorer folks' wealth upwards to property owners via government and Reserve Bank policy is the problem. It is an undeserved transfer of wealth to people who are just sitting on houses not making NZ better via building productive businesses.

Younger working generations are sick of carrying these folk and losing their wealth to them.

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16

I sat in a nice holiday retreat a few weeks ago listening to the conversations around me. I was surrounded by several tables of wealthy red-faced people swilling pinot and guffawing about how they live off their properties and investments - swapping tricks and tips and bragging about their illicit gains. Meanwhile there are hundreds of thousands of hard-working kiwis earning next to nothing and providing the labour and rents that sustains these gluttonous, lazy pigs.

Anyone who professes to be on the side of the hard-working kiwi, should support Land Value Tax (and rental market reform, an end to involuntary unemployment etc).   

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73

Says more about you being in a venue with 'several tables of red-faced people......'

 

I call bullshit on your claim

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7

Nice. I was in the middle of tramping a popular NZ trail and the nearest alternative places to eat / drink were a few hours walk away to the north and south.

The guy on the table next to me was a real estate consultant advising an investor who was looking at a nearby section and asking about boat access, bulldozing new trails, splitting sections etc. The table on from that was two couples from Auckland with multiple rental properties - discussing the relative merits of different types of tenants (by ethnicity, age, work status etc). Next to them was a group of female police officers discussing how useless mental health services were - meaning they had to deal with crazies who should be in hospital. I could go on. It was one of the most depressing evenings of my life. I despaired for humankind. 

Maybe you were there?

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41

That is probably the best retort I have ever read.......  

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18

Ha! I have heard very similar conversations to this coming from the table next to us at a high(ish) end Auckland restaurant, where I went on a date with my partner.  Landlords drinking champagne, treating their properties like monopoly cards, rubbishing their tenants while guffawing at how amazing they were.

Maybe you don't get out much? It's a pretty common conversation, once a bunch of property investors have a few drinks and are in each others company, certainly not the first time I have heard such talk.

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21

They're society's most generously subsidised group of beneficiaries but they seem to lack self-awareness of that fact.

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26

Not really. Haven’t received a cent from the government and the tenants have jobs and work. 

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0

Interest deductibility was a "subsidy". Although the government is putting a stop to it, interest should never have been deductible in the first place.

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All the commentators above seem to be enjoying the high-life hobnobbing at top restaurants with the movers and shakers.  I wouldn't mind a piece of that.

Oh, you're being sarcastic.  I wouldn't have guessed.

 

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1

Its not bullshit that by taxing as TOP suggest we can bring housing costs down in a sustainable way, whilst encouraging investors to invest in more productive assets. Our Tax system is broken and a few loud voices can only muster so many votes bring on the next election. 

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The company a person keeps says a lot about them. The wealthy sip wine, the poor swill it as they need to get the rubbish they can afford past their taste buds as quickly as possible.

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Yep basically they are going to rob home owners to pay a UBI and home owners will get less back and the difference will go to those with nothing. Luckily TOP doesn't stand a chance because there are still 60% of hard working Kiwi's who still own their own homes. Home ownership has a long way to fall yet before TOP gets in, perhaps come back in 20 years and have another go.

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12

I am a home owner and would happily pay a land tax which went to a UBI pool. I can't be the only one? 

NZ is broken and doing the same thing over and over expecting different results it the definition of insane. Time to mix it up and try something new. Can't be worse than the direction we are heading now.

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61

With you on that one 

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And I.

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21

Can it get worse. Yes it can.

Land tax introduced = the steady transfer of land from those that can't afford the tax to those very wealthy that can.

A future government abolishes the land tax at the instruction of those wealthy donors. Just like death duties and gift duties were abolished. Or public assets were sold to private owners with money. 

The unintended result is worse inequality. But I agree something must be done. The first thing we need to do is abolish political donations or we will always be at the mercy of the rich and powerful. 

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Well if they're willing to shoulder the societal burden that comes with that landholding then that's a good thing for the rest of us. It would add an element of responsibility to the privilege of being a landholder. Right now people who hold disproportionate amounts of land are simply leeches.

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5

Rubbish. You can barely scratch together a living on a $2m farm. Now add $60k pa land tax and what will happen? Think it through.

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You do realise there are different classifications of land and different tax rates could / should be applied accordingly?

40Ha of land zoned rural production (and not subdividable) is wildly different from 40Ha of land zoned lifestyle where you could obtain 100+ sections.

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Sorry I missed that if it is TOP policy to treat farms differently. The point I was making is beware of unintended consequences. 

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TOP have policy that is researched and best practise unlike others. A lot of the ground work has been done by economists they want a better New Zealand not one funding banks.

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That is until it gets rezoned and you can’t afford to continue. 

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That's probably because you had to borrow millions to buy it. With land tax the land becomes valued at what someone can afford to purchase the land at while holding it productively. It also amazes me how many farmers plead poverty. At the farmer protests they're always driving round in new trucks and six figure tractors. Have you seen the price of a block of butter or a litre of milk? Right now they're killing it.

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The whole policy is completely full of issues. It is very cruel to people that have a particular lifestyle and then things get rezoned and they become much more wealthy but can’t afford to keep what they have.

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Maybe you missed the bit where the UBI would pretty much cover the land tax values? Then those that are working in high value land areas have to keep working, instead of just sitting back and watching their property increase ridiculously because the system is geared for them exclusively.

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That is the problem of private ownership of land. Most f it ends up in the hands of the wealthy. Better the crown own all the land, holding it on behalf of the people as a whole, and leasing it out to those that need it for residential or business purposes.

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3

Thank worked well in Soviet Russia didn't it?

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2

Why should we bother about what worked or didn't work in Russia. Different country different economic system.

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0

Voted for them last time. Will vote for them again.

As you say, all the other options there are just asking for a continuance down the path we're heading. Which is getting beyond 5hitty IMHO.

Labour, pandemic aside, have been an absolute disaster against all the chit chat on starting to pick up the pieces, fix things, lets do this, lets keep moving. Umm, ok.

National have imploded and now we're being offered up John Key lite and the promise that a business man can sort out our problems. I think most people are starting to realise that a country involves managing a much broader spectrum of issues than a business which can pick and choose the market it operates in.

ACT gets busy but they have some extreme ideas in there.

NZ First I think got found out as being the ultimate in spraying money around to buy votes.

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31

They don't need 60%, 5% would do.

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21

The system is a train wreck and the change will only come from an outlier like TOP.

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33

I've voted TOP twice.. don't know if I'd go a 3rd time..

Regarding UBI:
UBI is really giving government total power when combined with a paper-carrying-society - which is the current situation in NZ.. that and racial politics.

Unfortunately it's clear such a system would only further empower the radical, authoritarian Left. Our current Rube Goldberg machine of central banking is bad enough.

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What are your supporting justifications for this: "UBI is really giving government total power"

Should we means-test our pension right now to reduce the government's total power? It sounds like we're in a radical, authoritarian situation with our universal pension.

Just concerned that your comment comes across as a little hysterical.

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Because then the entire population is reliant on the Govt for a large chunk of their income.

I used to think a UBI was a great idea, but the massive over reach of this Govt dictating every detail of our lives over the last 2 years has totally changed my thinking on this. The Govt should be reliant on us, not the other way around.

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@iliketobike

I feel exactly the same. Great comment.

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A UBI is less control of our money because it's actually in the hands of the people to choose how best to spend it.

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True...pensioners eh. Government overreach yada yada yada

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Its a democracy vote for policy or rhetoric. 43,449 party votes in the last election.

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0

It isn’t going to come from TOP. 

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0

Houses don't get to vote 

Last stats I saw around 50% of adults are not home owners. And like your stat of in which 60% of dwellings are owner occupied it's not been heading in your desired direction.

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Carlos,

I'm afraid you come over as just another selfish p*****k. I am very comfortably off thanks to yes, hard work over decades(doing something I enjoyed) but also lots of good luck-the luck of birth and the education that gave me. The luck that since i bought my first home in 1969, I have seen prices soar and thus been a beneficiary of something I did nothing to earn. I dealt in the stockmarket and have enjoyed the splendid performance of NZ shares sine coming here in 2003.

I have enjoyed the luck of excellent health for 76 years-though I now have cancer. But unlike you and too many others, I see beyond my own world and see that all too many aren't so lucky as me and the gap between us is growing alarmingly. I see this very starkly at the local Foodbank which i am involved.

I am getting too old to be over polite anymore. I have come to detest people like you.

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53

Sanctimonious claptrap.

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Room319 - Well said  !

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5

The ones ranting against LVT? Oooh yeah...

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7

Wrong set of ranters.

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1

Unfortunately there's a quite large and growing  number of people with the same sort of views. You can see it in a handful of people who comment regularly on this website.

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8

Shame it appears you don't know me at all. Sorry to hear about the cancer but don't let it turn you into spiteful asshole on the way out.

 

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2

The solution isn’t to take more off people that have something to take. The real solution is to create opportunities for them to enjoy some of that ‘luck’ you have had. 

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0

We cant all be landlord's, go visit the TOP web page. 

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0

The 60% of homeowners would also have a significant number of currently non-homeowning offsprings who will eventually receive a house-sized inheritance.

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2

There isn't much pride in finally being able to own a house because your parents died, then knowing that you were lucky compared to others that don't have any inheritance coming. Even needing to get a hand up with the mortgage with the when they are alive doesn't feel great as it's less of an achievement, and others aren't so lucky.

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3

Essentially you are advocating for a system of landed gentry.  NZ europeans came over here to get away from exactly that system...

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"Worked their whole lives" aka purchased multiple houses and enjoyed millions of dollars in tax free capital gains.

"Can't be bothered getting out of bed" aka work minimum wage jobs to keep the country running and can barely afford the essentials.

I understand the general direction you're coming from but when the bottom 80% can barely afford food and housing, the top 20% are going to see  rapid decline in the quality of the communities they live in to their detriment.

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55

As Adam Smith said, "As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce." If TOP implements a land value tax, landlords will no longer reap where they never sowed, and instead will only profit from their labour (that is, the capital improvements on top of the land). If you want to stop theft, then voting for TOP and the land value tax is one of the best ways to help.

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39

Yeah TOP's policies are terrible because the system we have now is perfect... 

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14

If you yearn for greater inequality, there's an effective solution......

Vote Labour.

TTP

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24

Or National

Or ACT

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25

Bingo

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0

My Mother in law worked as a carer for mentally handicapped adults. She was a qualified nurse but made barely over minimum wage working for a private company. Her only asset is a house in West Auckland that she got in the 1980's after she divorced. Am I right that TOPs policy would tax her on the increase in value of this home? When she sells, the equity will be used to buy a unit or room in a nursing home. She paid interest on the mortgage and tax on her earnings. Why should she be taxed on her "gains". The gains aren't realisable as the price of retirement homes has also increased. An inheritance tax would be fairer, at least she wont need the money when she's dead.

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TOP's property tax policy currently allows for deferring the tax until the sale of the property for NZ super recipients. It's also not a tax on the increase in value, but rather a tax on the current equity she owns, and combined with their UBI and income tax changes, she may end up significantly better off.

 

From the sounds of things the policy will undergo some changes as the new leader is more keen on a land value tax than the current property tax policy, but either way she may/should be better off under their policies unless she owns a large amount of expensive land outright. 

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10

I think it is hard to justify taxing a primary residence. Equity is used up when moving house as the market will have also moved. Only people with multiple properties or those moving to less expensive markets can ever realise their gains. Also, if the property was bought with a mortgage, the owner has probably paid double the cost of the loan over the 25 year period due to interest.

What about the people who bought cheap land in North Waikato for self sufficient lifestyle block living. The likes of Pokeno have driven up land values in the area. Will these people be taxed off their land as they have minimal income but are sitting on an increasing asset?

I would much prefer a death duty or stamp duty.

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Or make rent tax deductible off tenants' income.

 

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Death duties are morally repugnant. They're a clumsy cash-grab that does not distinguish between accumulated (taxed) revenue and the problem we have in NZ, which is accumulated untaxed capital gains being used to fund further investments in an essential good like shelter. Don't let the investor propaganda fool you, there's plenty of Mums and Dads out there who have never owned investment properties, but whose kids are now stuck with enormous mortgages and the only chance they have of paying them down is through an inheritance. Why they should be the ones stung for a problem caused by parasitic investors is beyond me. 

A stamp duty at least lets those who are knowingly transacting something bear the cost associated with it, with the added bonus of scaling them for 2nd, 3rd 4th properties and so on. 

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6

I think they're the opposite actually - they're the only real moral tax.

My philosophy is that you're entitled to keep what you earn with your two hands in life - handouts from mummy and daddy don't count. I would support much lower income taxes in favour of capital/land taxes and high death duties that kick in over a certain estate size. Also, i'd point out that in the age of accumulating property empires, "passing on nest eggs" just means concentrating property in fewer hands and entrenched a landed aristocracy.

The only issue with death duties is that they're literally unenforceable due to the widespread use of trusts.

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Sure "Handouts" from Mum and Dad count, I quit 7th Form half way through and spent 6 months building our house. Also did a whole lot of work on the land planting an pruning pine trees without even thinking at the time that it would benefit me one day, I just did it. If you have smart enough parents that accumulate wealth, why shouldn't they be able to pass that on tax free ? Thankfully the laws changed just in time to allow more than $25K to be passed on unhindered.

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"..why shouldn't they be able to pass that on tax free"  Lots of reasons if you apply your smart mind to thinking about it. But for a start you get genuine respect from your friends if you make your own way in life through hard work and smarts without trampling on others. Inheriting your wealth is a curse because you get no respect at all. But no blame either. 

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So you're not going to pass anything of value on to your children because their friends won't respect them?

I reckon its probably got a lot more to do with how you raise your kids,way before they get any inheritance that determines what kind of people they turn out like.

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It is effectively unspent income so If it is taxed then it is effectively being taxed twice. 

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True, anyone actually in favour of a meritocracy would be in favour of inheritance tax, because then everyone starts on the same footing and proves their merit.

Most folk are not in favour of meritocracy.

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We already tax primary residences in the form of council rates, and we used to have a land value tax for over 100 years in NZ, so it's not like we aren't OK with it at some level. I think it's actually far better to tax land than to tax income and goods and services purchases, as the reason land is valuable is because of all the work that your local community puts into improving the area (businesses, schools, roads, hospitals, buses, people that you want to live near to). Land-owners don't do anything to make their land valuable, it's the efforts of the community as a whole, and it is just to return that profit to the community that worked to earn it.

 

On the other hand, taxing labour in the form of income tax, and taxing purchasing in the form of GST just discourages working and purchasing, essential to a healthy economy.

 

Stamp duty doesn't have any useful effects to the economy, and is quite distortionary to property purchasing. Death duty is not going to be enough to fund much useful, and many people will just hide their assets in trusts for their children anyway. 

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Maybe the value to the owner is not monetary. They have no wish to sell, and want to stay where they are for generations. Are we saying that low income land owners should be forced into town, leaving the rural areas to the cash rich and carbon foresters? Doesn't seem very fair to me. 

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How low income are we talking? Take this place: https://www.realestate.co.nz/42072569/residential/sale/16-barnfield-roa… and a single owner who has $0 taxable income per year.

11880m2 of land, $375,000 purchase price. An LVT of 2% would be $7,500 per year. Current rates for that property are $2,008.11 per year. Combined with a UBI of $13,000 per year, they would actually be significantly better off under the UBI + LVT system ($5,500 before paying their rates, which previously they would have had to find income for).

 

The real situation that is more difficult is when you have, say, a retired pensioner who bought a piece of land for $2,000 and built a house on it in the 1960s. It is now worth ~$2,000,000 in Browns Bay, Auckland, with land being, say, $1,750,000 of that. An LVT of 2% would be $35,000, and the UBI would only bring that down to $22,000.

But wait, that's covered by the ability to defer payment until sale of the property for pensioners! No one wants to kick old people out of their homes, even if it's less efficient.

 

Now, is it possible to find some circumstance where someone is worse off and society as a whole would say "hey, we don't like that"? Yes, probably. We don't generally have much sympathy for people who own many properties being worse off, but probably there is a scenario where someone loses property that we don't want them to be forced to lose. I think we should try to find ways to resolve that, but the question you need to answer is this: "Is it better to maintain the status quo of an increasingly small number of landed elite reaping huge unearned rewards due to the hard work of the increasingly large number of permanent renters?"

 

And in my opinion, it is absolutely clear that the status quo and the probable future if nothing changes is far worse than the edge cases that would be worse off under the LVT + UBI system (or pretty much any variant that adds land value tax and decreases effective tax in other areas).

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Thank you for the real world examples. I agree with you to a point. I just feel more comfortable taxing those that intended to make a profit (multiple property owners) rather than those who just wanted a home and will use their "profits" to pay for their care in their last few years. I do agree that the status quo is not an option if we want a fairer society.

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Please have a read of the Tax policy, use the calculator, for society to be fair we need fair tax.

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Except the land costs more than that. My very modest house on a smallish piece of land is valued at about 700k. 

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Will these people be taxed off their land as they have minimal income but are sitting on an increasing asset?

Yes. Because previously they used to own farmland, which would have been zoned as such. Now they own residentially zoned land. They should be encouraged to sell. If they don't sell most of it, they need to pay land value taxes on it. 

We already have umpteen problems with land banking, the proposed solution would help solve it.

I think it is hard to justify taxing a primary residence. Equity is used up when moving house as the market will have also moved.

As stated in the article, it is likely UBI amount for a couple in an expensive suburb, would be equivalent or above the amount paid in taxes for a LVT. So no change for them, to being slightly better off.  People buy and sell all the time at the moment so if "Equity is used up when moving house" then that's no different as is currently.

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Land can only be sold with title in NZ unless it is a boundary change to a neighbour. They can't sell most of it. It would be all of it or none of it. I thought this Country had stopped forcing people from their land.

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Zoning is done at a council level, the discussion about "forcing people from their land" would have already happened at discussions about rezoning at council meetings prior to any tax being collected.  While the policies impinge on the issues of private ownership, its a model that advocates for best use of land from a countries perspective, more than from the existing land owners perspective. i.e. TOP policies would push more towards collectivism than individualism when thinking about land use.  But note that such policies are likely more aligned with Maori ideals of land ownership - people being collective guardians of land for future generations, rather than outright land owning benefactors, as we have had in feudalist societies.  The latter NZ is looking more and more like it is slipping into (or at least a landed gentry, class based systems).

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For the conservative Milton Friedman LVT was "the least bad tax". It reflects that land benefits from society around it and some of that value is ideally recaptured to avoid instead overly penalising productive work. It has the benefit of being unable to be avoided by structuring too. 

Too often the objections to LVT fail to appreciate just how terrible the effects on productivity and work and thus living standards income tax must be, if LVT objections are even a quarter true...

LVT is not "forcing people from their land" as some more hysterical comments might suggest, especially when 80% of NZers would be better off from rebalancing tax to more fairly share the burden of funding our shared services and society.

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Isn't Maori collectivism based on kinship. A related tribe of people developing their own land for the long term, it is not collective in a wider sense. It is an extended family looking after their private interests. They are not sharing with people that they have no relation to. 

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Yes, and anyone not in that kin group (tribe) is fair game for slaughter or enslavement. Another reason not to have this mystical/romantic notion of pre European society, undervaluing the general package of human rights that was brought here.

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I actually admire Maori and Pacifica for their care of the extended family. If we all did more of this we wouldn’t need so much state intervention and old folks homes. At the time Europeans were arriving in NZ we were still hanging children for stealing a loaf of bread. 100 or so years before Cook, Cromwell ordered the massacre of every inhabitant of Drogheda in Ireland. We weren’t so civilised ourselves. 

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Also, if the property was bought with a mortgage, the owner has probably paid double the cost of the loan over the 25 year period due to interest.

This is one of the things that makes capital gains taxes seem farcical. Interest paid should probably be regarded as part of the acquisition cost of the house. If nett interest paid was built into the base price from which capital gain was calculated, there would probably not be any capital gain.  

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Yes! Birdie gets it and to add to that, the settings are very likely to be studied very closely and tweaked to discourage land banking/huge land ownerships etc and encourage productive investment in their land.

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The majority of people are rorting the system when it comes to retirement homes. 2 out of 3 have the government paying the lot due to houses in trust and money being squirreled elsewhere. People stand up and spout that they are honest and don't mind paying for services, its just BS the second they are actually facing the prospect of forking out $1000 a week.

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Yes Carlos. The whole idea of trusts nead to be looked at. Some will be for a genuine purpose, but most are just to diddle someone else, usually the taxpayer or spouse, out of money. 

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Whereas, by that line of thought, the current policy is stealing from all, especially our kids. Your user name is ironic :) 

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I agree a land tax is the way to go. I’d also like a reduction in the mind numbing bureaucracy we have in this country for building houses!! -5 council houses built. I’d like to see a big push from TOP as there are no other credible options in my opinion. If there was ever a time…..

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A land tax? Assume that excludes improvements? If not the local councils have already flogged that one to death.

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The land tax inherently excludes improvements, yes.

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Yes, so it is an incentive to make better use of the land

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a disincentive to land banking.

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And successfully used in New Zealand in the past to break up speculators' land banks and get land into the hands of average Kiwis.

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If you're in a position to do so. Otherwise, if it captures family homes, it's just a tax for having the gall to live somewhere. 

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The UBI is equivalent to a personal deduction from land tax and other taxes. Effectively it means that you're entitled to hold a certain amount of land before you start feeling a tax burden. And everybody gets the same deduction.

 

Milton Friedman mentions it here. https://youtu.be/yS7Jb58hcsc

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Sorry to break it to you but living in NZ involves paying tax. Whilst you may be able to avoid income tax by farming capital gains, you still have to pay GST on spending, rates on property, RWT on savings and FIF on your kiwisaver (a capital tax!) - all just for being a tax resident here.

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A major issue with taxing land as a source of revenue is that the government still has huge agency to hugely restrict the supply of land, as they do now. We have seen that the government is a Bad Faith Actor when it comes to things that might negative affect its revenue collection, such as fiscal drag, excises on essentials like fuel for personal transport and the effects on ordinary Kiwis and those living close to the poverty-line or below it are frankly irrelevant.

We have to remember that, at present, it is in the Government's interests politically to get house prices lower and in opposition, they insisted land availability reform was the way to do this. In power, they basically tried to pretend they ever said anything about it at all. So even now, when it is in their interest, they won't do anything.

Making land values a large factor in the taxation base gives them a massive incentive to not only continue to restrict land, but to in fact go further and reduce the available supply of land further as a means of increasing their own revenue. As cited above, this is the government's current MO - we would be naive to think that they would suddenly start acting differently once a huge chunk of their spending money depended on land values never dropping.

The effect on an already-crappy housing market and social unrest would be catastrophic, but even now, they have shown they simply do not care. This would only add fuel to the fire.

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That is an excellent idea.  The problem would be a govt run house building company.  It would have to be something like builders competitively tendering to a body like Transit.

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Given the nature of NZ, it sort of needs to be. There should be factories pumping out pre-built dwellings in NZ, at best we get little cottage start ups that seem to fall over after a couple of years.

There needs to be a unified effort to build mass housing and sadly government is the only entity able to do this.

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LVT really depends on the V - the land value assessed for tax purposes.  It's quite possible to value land in ways that dodge the current fustercluck, under which valuations are driven by adjacent sales figures, and which depart significantly from the underlying value (rural land at say $50k/ha, so $4.6k for a 600 squares plot) plus services (3 waters, roads, reserves).  On that basis alone, it is an idea worth pursuing.

Raf is one smart cookie: his time at Christchurch City Council was a breath of fresh air.  He deserves a considered hearing.

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Yep wish he has stood instead of Gerry, rather than against him. That would have been a double movement in itself positively, for parliament. 

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Yep, best big picture/future thinker I've encountered lately. And his catalogue of knowledge across so many disciplines is amazing.  

It's going to be an interesting election.

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So basically tax tax tax - Great. I dont know when these socialists will realise that true wealth is only generated when you create and make something of value, rather than just financial engineering the shit out of society. 

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If you plug your numbers into TOP's calculator, you might find you will pay less tax, not more. Changing how tax works is not the same as taxing more.

 

"true wealth is only generated when you create and make something of value"

This is correct, which is why it's really important that we stop people profiting from land when they didn't create anything to make the land valuable. Society's labour is what makes land valuable, which is why society should get the returns of that labour instead of landlords. Landlords should only profit from the housing part of their property, not the land.

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What are landlords creating?

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Housing, so they state doesn't have to, because at the end of the day it's not cheap.

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The great thing about a land value tax is it doesn't stop landlords from profiting from housing, it only stops them profiting from location value. If you build a house you should be able to hire it out and get some money for that, and the land value tax doesn't prevent that.

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And would they pay tax based on that housing value or on the land with a land tax?

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Sorry, landlords buying up entry level housing and outbidding FHBs is 'creating houses' how, exactly? Seems like their whole gimmick has been rolling over equity gains in order to force more people into the funnel of requiring accommodation that they provide and charge like wounded bulls for. 

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Developers create housing, not landlords.

Landlords create sfa.

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Landlords create additional ownership demand for existing property, which is above and beyond the underlying demand for shelter.  

 

 

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Builders create housing. Landlords simply profit mostly from the unearned land rents due to their natural monopoly.

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Housing, so they state doesn't have to, because at the end of the day it's not cheap.

They don't actually create housing, but merely exploit existing housing.

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What are landlords creating?

Poverty?

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Their own entitlement?

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An underclass?

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Most nothing just outbid first home buyers so they can take a punt, whilst funding the dept with rental income.

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I don't understand the hatred towards UBI. 

People currently on the dole are more incentivized to work. 

People who want to start their own business have a safety net so are more likely to do so. 

 

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Plus the reduction in size of government currently used to deliver multiple benefits that a UBI would replace.

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hatred largely due to the vested interests who benefit for the status quo.  This includes those that wish tax to remain the burden on labour

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I agree --  its a great idea --   but the right dont like it as they fear the masses sitting on their asses not wanting to do all that low paid menial work -- and the left absolutely HATE it  - because they lose control over their key voting block !   

The people who really love the idea are hard working Kiwis -- teachers, nurses social workers engineers, tradies --  who would for once not be squeezed by tax policy and finally be assured that the harder they worked the better off they would be !

The efficiency of not taxing a huge chunk of the population only to give it straight back in WFF and Accommodation Supplement would be a winner for starters - 

Certainly be worth trialing it in an area of NZ for two years --  with a clear exemption to stop people moving into that area just to grab the UBI and seeing what the results would be --    

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Milton Friedman - the conservative economist - pointed out that LVT is the least bad tax (for negative effects) and was an exponent of it.

LVT is not socialist at all. We could reduce tax on productive work which is actually what drives living standards, rewarding those who improve New Zealand instead of just those who sit around on their ass-ets all day.

"Socialist" in your post smacks of just another "anything I don't like is socialism!" 

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That's exactly right. It's all about making us more productive as a country, using our land and resources better and putting taxes on those that use resources unproductively.  None of the people against this happen to mention a way to increase productivity in a broad based manner across the country.  And productivity, in the long run, is almost all that matters when deciding the wealth of a nation.

If all those asset rich people want to be even wealthier, the only way to do so is to break the current idiocy of speculative land owning and reinvest in the productive economy.  And we need a complete rethink of our tax and welfare settings to do exactly that. Fluffing around the edges will get us nowhere.

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For the citizen's dividend/UBI to work, it is critical that we also have a land value tax. Otherwise, the UBI will end up in the pockets of the landlords, the same as the Accomodation Supplement and other forms of welfare.

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I’ll vote for this. Don’t love all of it, but it’s better than the infinite varieties of can-kicking offered by the other parties.

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Yeh this is pretty much where I am at. NatBour - same sh*t, different year. No new ideas, same old results = NZ continuing on its downward spiral. Time to mix it up and try something new.

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Thank you for the support brisket! This is exactly right and what all the TOP supporters have been banging on about.  You are doing EXACTLY the same thing if you vote for National or Labour, they are the same party with almost exclusively the same idea.

And those ideas are rooted in ideology, which hasn't been updated for a century or so, despite the world changing massively. It simply is no longer suited to the environment we find ourselves in.  

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UBI = reduce the super age to 18.Isn't it unaffordable as it is?

...and then who will actually work when everyone retires at 18?

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Try reading the article brother.

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Try doing the maths, tax take will have to be spectacularly higher.

If you have above average earnings or wealth you will be far worse off under these policies.

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Yeh that is kind of the idea. A bit of wealth redistribution to make our society better for all. Guess you're the greedy landlord type.

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Yeh hate to be the type of person who worked doing shit jobs, not playing with Bitcoin who finally got a decent house only to be suddenly taxed yet again. Hang on where is my middle finger.......

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Your argument fails.. no one working a sh*t job is buying any house, let alone a decent one.

I hear prostate cancer can be detected with a blood test now, this info may help free up your middle finger.

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I would be better off under the policy because of the LVT but still think UBI is pointless.

Better just to reduce PAYE by the amount of the LVT. Increasing the tax free threshold and leaving existing benefits in place would achieve a similar result to this proposal.

In this case the UBI is mostly just tricky accounting, taking with one hand and giving with the other.

And as far as abatement issues go it just moves the problem via a high flat tax rate.

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Think of the UBI as a deduction on land tax that everyone is entitled to. So what that means is that if you hold less than your fair share of land you get subsidised by those who hold a disproportionate amount of land. Its equivalent to what Milton Friedman described as a personal deduction.

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https://ubi.top.org.nz/ try it yourself, I have pretty high household income and would be better off under these policies.

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I would be $1,000 better off if my mortgage remains at the same level. If we paid it down, we'd be significantly worse off. So I'd be paying extra tax for the pleasure of not having a mortgage on my only home. How is this better? Debt servitude is rewarded with lower taxation? Yea, this sure sounds like sensible and not totally insane tax policy.

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I think you must be mistaken. Mortgage level is not a relevant variable in this particular system. This is not an equity tax, and mortgage levels affect only equity.

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Interesting. Wife and I are high earners and we'd many thousands better off.

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Me to.

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Shows you how much burden the landholders of this country have managed to foist off onto workers.

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The calculator doesn't account for the current top 39% tax rate.

 

Also I noticed this nugget on the top.org.nz website:
https://www.top.org.nz/universal_basic_income
 

Won't giving out free money with the UBI just result in inflation?
There is the potential for this to happen however, given the current low inflation environment it is unlikely that general overall inflation will increase markedly and certainly not outside the Reserve Banks 1% to 3% preferred range. With an extra $16B in circulation (before the property tax is paid) in an economy of $310B GDP the maximum additional inflation would be 5% if there was no ability to increase supply or reduce consumption of goods and services. Given the complexity of interactions that result in inflation the number expected would be lower than this.

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I think the biggest criticism of a UBI is that it is not counter-cyclical. Welfare policies give out more money when the economy is down and less when the economy is up - a UBI does not. Personally I favour a UBI coupled with a jobs guarantee programme (which is counter-cyclical) where the jobs are not in competition with industry - but needs to be very carefully done so not just one giant boondoggle.  

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I am of the belief you could hand over the UBI and LVT management to the Reserve Bank as a tool to control inflation. This isn't described yet, but I can imagine that is how it would work.  If there is too much heat in the economy, tweak the UBI lower and decrease LVT. If there is low inflation, up the UBI and LVT.  Combine this with monetary tools (QE) and fiscal tools and you would have a lot of control over inflation. (note, this is me spit balling, it's not part of their policy)

Of course both the Finance department and the people at the RBNZ would not have to be mired in ideology themselves to make it work properly.

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Welfare policies may be countercyclic, but a UBI is not welfare.

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Some of the people advocating for a UBI, eg Gareth Morgan and Keith Rankin, insist that it should be accompanied by s flat tax. I assume that TOP is continuing with that idea and, if so, and if that flat tax is set at 33c/dollar, then much of the cost of a UBI would be met by the withdrawal of the $9,000 dollar odd "tax subsidy" at present being received on income of less than $70,000. (At present the 33c tax rate cuts in at that income level.)  

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Yes, a flat tax rate, simple and stops all sorts of income tax gaming that happens at the moment, plus stops bracket creep. Use TOPs UBI calculator to figure out how it would actually work, but basically you would have to be on very high incomes for your tax bill to be higher than it is currently. (note, I believe they haven't put their 39% tax rate on it yet for high income earners).

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Currently if you turn 18 and don't want to work you can go on the dole.

If you are on the dole and want to work you essentially get min wage - dole as your effective wage.

If you are on UBI and want to work you get min wage + UBI. 

 

 

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Actually the take home pay would be similar, as with ubi all income is taxed at 33%.

The same thing could be achieved by making the first $40k (min wage) tax free

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Looking further ahead, UBI is inevitable as more and more middle class jobs are rolled through AI. My marketing guy was telling me he uses AI for all his copywriting now, apparently does a better job than a person. I can only see the net widening and a growing number of people having very few work opportunities.

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And yet unemployment is at an all time low

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Good luck to anyone retiring on $13,000 per year!!!  

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Those collecting super would be topped up, but with those retiring having higher and higher kiwisaver contributions, these top ups would be tweaked all the time.

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Well NZ absolutely needs political opposition that, has at ist core a creed that will not be negotiated away in post election wrangling.

1 The voteris paramount in any decision making

2 Bringing offshore assets that continually fleece the NZ tax payers back onshore through punitive tax policy.

3 Policy that sacks reserve bank governors when consistently missing their mandate

4 Policy that foresnicallyaudits politicians for the last 20 years to find out why we have governed for the few so consistently.

 

We need disruption,  if a party comes along with slaughtering sacred cows at its centre.. it gets my vote. If it wants to play nicely with the current bunch of self-serving hypocrites... not interested.

 

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Property is the last untaxed frontier in NZ, and one of the reasons everyone has piled into it. It cannot and will not remain this way for ever. GST and PAYE needs to be reduced, so the tax has to come from somewhere. Debt speculators will naturally cry fowl, see some of the above post. Well tough luck "milord", but you have done this to yourselves by screwing the system to the point that this is the only logical change.

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Average man - Property is not the last untaxed Frontier  ! A capital gain on any asset is not taxed , jewelry,  art, cars, business  think of Trademe tax free on the $600mil sale price .

If a sensible GCT was put forward on all asset classes rather than Flogging  Property all the time it probably would be more acceptable to most.  And no exemptions for family homes otherwise that causes further distortions  ! I'm all for a Cgt but one that everyone has skin in the game  !

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I've always thought the fairest, easiest and cheapest tax to implement is a CGT on everything.

NO EXCEPTIONS.

Cars, bitcoin, houses, art, concert tickets, ANYTHING that is sold for a profit.

There's no confusion or possible avoidance. Tax is always owed.

But that tax is set at a very low level to compensate and ensure compliance. 5% for example.

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Debt speculators will naturally cry fowl

Birds of a feather etc.

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On the whole I'd worry less about policy and more about getting a foot into parliament.

Democracy may bring forward humanities most closely held ideals - but winning an election is a filthy fistfight in the dirt. Get ready to throw some jabs, learn to take a punch and get back up again.

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Keep it simple and straight forward. 

Natbour wrecked it.

Our changes fix it.

They can't afford to get pinned down by neolib TINA bullshit especially from the "we've worked so hard, you want to steal it brigade ". There's no point in arguing with them even if you can prove beyond a doubt they will pay less tax, they simply do not want to listen/change.

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Why do people vote is it for policy or party? If you want a country with a Tax system that supports opportunity vote TOP.

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If we are taxing environmentally harmful externalities, the increased emissions from unsustainable population growth from migration should be targeted.

I'd be interested to hear TOPs policy on population growth (which doesn't get a mention in the article, but previously was one of their best policies). If it was front and centre of their platform this time round they'd have my vote.

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Agreed. It was a good policy. Door shut unless you had real skills we need (specialist nurses etc). No more uber and bottle washers. But limited in numbers. Note it did not restrict temporary workers (fruit pickers) bu they had no path to residency. Again most kiwis would have voted against going from 3m to 5m population. I personally do not recall that ever being something that was campaigned on.

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Should we also tax large families ? That is another kind of unsustainable population growth of course. 

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Sadly he's not actually trying to 'save the environment' he's just trying to appeal to a segment of voters.  You can't change CO2 emissions without putting fossil fuels front and center, it's a simple fact.  I am sick of hearing the anti farming rhetoric from know nothing politicians!  Population comes a fair second, but ultimately it all comes down to FF.

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I think a land tax on top of the tax on debt and the tax to pay for unemployed people to get paid more will make rents cheaper.

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I think you're right. Here's a discussion that explains how land taxes would most likely reduce rents. https://np.reddit.com/r/newzealand/comments/6b6qy5/landlords_threaten_r…

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Anything in extreme is bad. 

TOP may have good intention but by going overboard in extreme will lose the plot. 

This is the perfect opportunity that TOP will ever have due to Big inequality created under Jacinda Arden and the only way they can reach 5% is by targeting those who have been left behind because of Mr Orr's policy of least regret in protecting rich and when things were getting out of control  in favour of wealthy went with policy of Wait and Watch. Jacinda and her knights who having tasted victory/blood after wooing national supporters by promoting housing ponzi (National support base) are now on slippery floor, which can be taped by TOP though have doubts that TOP has Organisational skills to reach their goal.

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Georgism is an antiquated, fringe movement that will never take hold in New Zealand. TOP is a wasted vote. 

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Who represents those who want change from Labour or National, two different sides of the same coin?

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ACT 

 

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Have you read their policies? They want to cut about half of government spending. They're pretty much designing a system that would trend towards plutocracy. And they're only going to make the current game of Monopoly accelerate.

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No such thing as a wasted vote. Telling people not to vote for their preferred party is undemocratic.

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A wasted vote is wasted even when the person casting it does not understand it  . 

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Labour - Awful

National - Awful

ACT - Awful

Greens - Awful 

Everyone else too small and a "wasted vote" according to you

So your recommendation is to not vote? 

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It is you who thinks they are equally awful. This is where you are wrong. 

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Never said they were equally awful. But why would I vote for someone who is awful? 

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You need to apply the same critical judgement to TOP ; just because they are "new(ish)" does not make them less awful. 

Their policies are an incoherent mess ( kind of ) held together by the theme of partial / gradual confiscation of private property in order to buy some votes. For all the faults of the existing parties one could hardly do worse than to vote for them . 

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That is your opinion, not mine. 

You are saying I shouldn't vote for them because it's a "wasted vote" 

Do you think I should vote for a party that I think is awful, "waste" my vote, or not vote at all? 

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I vote for the party I find least awful from the available selection of parties that actually have a chance  of getting into Parliament .

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And this is why nothing will ever get better. 

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A statement not supported by any reasoning .. but let us grant it just for the sake of the argument . 

If you believe that , why do you bother ?

 

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Ah yes, I should vote for a party that I believe will be a detriment to society and then expect things to get better. 

 

If there is a party that I think has good policies I will vote for them, or I won't vote. idgaf if it's a "wasted vote" I'm not corrupting my morals by voting for a party that will make society worse. 

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So  we agree it is a wasted vote after all ; your remaining point is that it makes you feel better . Ok , glad that's cleared. 

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It's "wasted" if people continue to vote the way you do. Voting for the least worst option in the hopes that that will make the country a better place. It's worked great so far. 

 

 

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Uh…scary 

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Yes they are all awful, but which one is the least awful? And is it worth voting for a party that is awful but the least awful?

If you asked me which party was the least awful right now I would struggle to answer. Possibly National, but I reserve judgement on that until I see more of their policy revealed over the coming year or so.

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Perhaps a vote should be used strategically and not wasted to get who you know has been awful the hell out of government. A wasted vote is a vote for Labour as it currently stands. You have to ask yourself do you want this lot in for another 3 years ?

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What we really need is a "vote of no confidence" 

Labour has been demonstrably bad over the last 3 years, would National have done any better? I doubt it. ACT? Greens? nope. 

I'd rather vote for a "no confidence party" that has an empty seat in parliament. 

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Mr Raf Manji, When speaking about your policies, speak in language that average Kiwi, who may vote you understand and policies should be sensible, start with highlighting one or two to start with.

Labour may lose their vote base big time provided any other party can instill  confidence that their vote will not be wasted.

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Labour is allowing its core voting block to get burned by inflation to protect bank profit. In short a shameful abandonment of its core foundations. We need a party that actually has the balls to promote a change in property taxation. I'm picking that is this starts to get legs, Lab will pick it up. Just like Winston...dont believe them they have demonstrated they are nothing but Chardonnay Socialists.

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It may be antiquated, but it is nevertheless rational. It's only entrenched vested interests that are preventing land value taxes from being adopted. It is time we called out those reactionary forces for the miseries that they are causing.

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To return to the real world, how does TOP propose to determine the fair and precise value of the taxable equity for tax purposes in one's property, either the house or land or both.  We all know that the current values  used for deriving council rates are not accurate and up-to-date so using these could be seen as invidious as neighbours inevitably compare values.

Would the IRD have to employ an army of valuers to keep these proposed valuations annually up-to-date? 

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.. and how would that value be affected when land prices sky rocket by 25-30% within a year as direct result of money printing as we have just seen ?

Great way to encourage the govt to print some more ( print .. inflate land values .. get more tax .. repeat ) - as if they needed any further encouragement . 

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TOP have a couple of problems:

1) The 5% threshold locks new parties out (wasted vote fear).

2) They greatly over-estimate the intelligence of the general public.

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On that second critical point, they need to work hard on converting what their policies mean for society and the average person.

Because you are right, the majority of the population aren't very clever.

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They could definitely explain their policies more clearly - but they will also need much improved access to the population through the media. This will rely on getting more charismatic communicators on board who make great TV, radio etc. I would also like to see them explore some of the universal basic services space. You can reduce the cost of living by working on the cost side as well as the income and a $13,000 per year UBI fails the first test of UBI schemes (that the $ is enough to live on).

 

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When elections roll around, the media won't invite parties to the debates that don't already have a seat in parliament.

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I suggest checking out the Retirement Policy Research Centre's proposal for a Fair Economic Return tax instead of either a land value tax or tax on capital (as TOP had previously):

https://cdn.auckland.ac.nz/assets/business/about/our-research/research-…

 

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A "fair economic return" tax was roughly what the TOP was advocating previously (though they called it a "risk-free rate of return" tax). I think a land value tax is probably better. The FER tax was calculated, in the case of householders, essentially as a tax on equity, and had the advantage of providing them with interest deductibility. However, with the government removing interest deductibility in the case of rental properties it would have seemed appropriate that FER, if TOP were to continue with it, should be based on the full value of the property. A land value would  be better since its rate could be set independently of income considerations.

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Good points, thanks. I guess I'm agnostic so long as we get some non-distortionary tax onto property. Issues with LVT lie around Maori land and what to exempt I think.

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UBI? You lost me there. Maybe go and assimilate with the Greens.

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Can you please explain why our current welfare system is better than UBI?

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I don't understand them either. It's almost like they prefer for people to be paid not to work rather than given a firm base whether they work or not. It gets rid of welfare cliffs, and compared to our current system actually encourages people to work and be productive. It's also pretty clear that everyone deserves to have the basics of survival. Shelter and food. If we provide that as a society to everyone, there's no fairer way to approach welfare. And we'll know that everyone's been at least given the means to look after themselves.

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Four basics:

  1. Shelter
  2. Food including water
  3. Transport
  4. Security

Remove one, and some or all of the others facepalm.

  • Food far away from shelter, needs transport.
  • Food grown or stored at fixed locations needs security.
  • Security needs transport as it typically involves far perimeters and fast response
  • Shelter needs transport of materials and Security for continued quiet occupancy.

It's an ecosystem.....hard to build, easy to destroy.  The pre-European history of NZ gives plenty of examples: the southwest of the SI was Moho Kaherehere: the Fugitives' Bush.....See Syd Cormack, Four Generations from Maoridom, P150.

Homelessness has a long history.....

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Strangely, many of these same objectors to UBI are in favour of a universal benefit when they reach 65...

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Because only the people who need it get the hand outs. Giving it to everyone is just wasteful spending.

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It is demonstrably false that only the people who need it get the hand outs at the moment. 

Giving it to everyone gives people incentive to work and to innovate. 

 

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Think of it as a personal deduction from the land tax. It means everyone is entitled to a fair amount of land, and if you don't exclusively occupy your fair share you are compensated for it.

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Hi Carlos <waves>

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I really like the way TOP are thinking. They have my vote.

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The thing is if wealth is shared in time the non wealthy will just come and take it,very similar to whats happening in NZ now but on a larger and more violent scale.

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It's not rocket science. Thousands of property investor have simply jumped on the bandwagon. They didn't invent the idea. They simply did the spreadsheets, took the risk. Did the research. And it's paid off big time. Anyone could do it. 

Last year there were 2 kids from Taupo - stacked shelves in pacnsave & saved. Bought their 1st house & off they went. aged low 20's.

But it does take hard work, sacrifice your netflix etc, and have a goal. Live wisely. (no drugs / drink / smokes / fast cars and so on. ) & anyone can do it.

Most investors are no brighter than you or me. You can't tell me that PI's have a higher IQ? They just saw a way of getting richer quicker - and took it. You all could do the same.

And if you did, then there would be more rentals available. So everyone wins.

Stop being jealous & bitter & join them. Then you too can have the Sav Blanc in the sunshine.

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Ah yes, my $13 a month streaming service budget is the difference between owning a house and not owning a house in a market distorted by central governments desperately appeasing an increasing belligerent property investor class, all the while pushing actual family home ownership further and further out of reach for middle class New Zealanders.

But sure, I'll cut back on all the smoking, drinking and drugs that I don't buy or do and then that will suddenly make up for when prices spike 30% in one year. Totally going to cover it. 

What a shame we can't monetise out-of-touch boomer snark, otherwise we'd all be on easy-street.

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Right , it is impossible for a young person in NZ to own a house , no matter what one does. 

Oh wait .. 

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This would be a relevant point if I'd actually said that at any point, which I did not. 

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Paas-arse. I’m not really sure this is the right website for you mate. See my link at the start of the thread. It was insightful, thought provoking and a possible solution to the housing crisis. 
All I’ve heard from you Is bollox. Try Facebook maybe?? 

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haha .. you clearly do not like hearing opinions that differ from your own - perhaps the Web is not for you ?  

Cheap insults you resort to just make you even more pathetic .. mate.

 

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LOL a smashed avocado warrior in the wild.

Now, young working Kiwis, get back to work to pay his free pension benefit. And cut out 10 takeaway coffees per day and 5 Sky telly subscriptions per month, for 20 years.

Property investors jumped on the bandwagon because our current policies have transferred free money to them while others pay for society's services. Addressing the policy imbalance and rewarding productive hard work instead of sitting around on our ass-ets if very much the point. Hard work should be rewarded with lower taxes while LVT or similar addresses the imbalance and free money that's been transferred to investment property via poor policy.

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Don't start talking common sense on here Neil, there's no room for it here the dead pool is full of DGM's. Only 2624 FHB's in December 2021, they must have all won Lotto or something. Shame we don't see more of them on here if you ask me, would be interesting to know the compromises and sacrifices they have made to get into their first home. Still as you have already discovered, nobody likes a good news story on here.

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We have gone without a new car, flash holidays and big Christmas/Birthday gifts in order to pay down our mortgage faster, as I was taught that debt was a bad thing. Now it is suggested that I should pay tax on my equity. Why did I bother?

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There's a remarkable cross-over between what some consider 'common sense' and what are actually played-out boomer talking points that have been repeatedly discredited by objective statistics that show that millenials get paid less but save more.  

Those FHBs are taking on many times more debt to buy a First Home than the generations that have gone before due to said previous generations' selfish and myopic behaviour, drawing down on the future earnings of their children and grandchildren. 

It's not that we don't like a good news story, we just don't like to see the boomers drooling into their cereal and muttering about having to walk 15 miles in the snow uphill in both directions to get to school anymore. Frankly, it's boring at this point, and your live experiences and 'common sense' has no relevance beyond a talkback switchboard. 

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Anecdotes that identify individuals who have done something doesn't agree with the statistics. Homeownership is increasingly unaffordable, the younger you are, unless you have parents to help you.  We see increasing number of young people having to ask mum and dad for money, we see increasing age of home ownership, we see decreasing home ownership rates. 

Your solution is for everyone to become a property investor? How will that work, property investors need someone to rent their properties, without them, their properties will sit empty.  Meanwhile productivity in this country is horrific, falling way behind our peers. The only thing that has enabled your behaviour is poor policies from consecutive governments that pander to property investors as most of them are themselves. 

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Then tax the investors and multiple property owners not the owner occupiers. TOP have some really good ideas. They can't implement them without TOP being voted in to Parliament. Taxing owner occupiers is a vote loser and the main reason they didn't get 5%. TOP should leave the family home alone and concentrate on the empty homes, land banking and multiple home owners. 

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That would be logical and sane .

It would never pay for their longed for UBI though - and would cost them the support from the crazy fringe - which is their only target market. 

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For the last time, their policies do NOT cause the net taxing owner occupiers. The amount of the UBI for property owners will more than likely cover all of the LVT and then some, if it was implemented as TOPs policy suggests. I do not believe TOP would ever just tax property owners without the UBI in place. To keep suggesting this either shows you haven't read the policy or you are being obtuse and building a strawman argument.

Leaving loopholes for such tax is going to cause more trouble than it's worth and dilutes the intent of the policies. For instance, as seen elsewhere, when the family home is left out of land taxes, home owners tend to plough all of their savings into improving the value of that home.  Again, you cause untaxed capital gains and discouragement to intensification.

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gg.. it is actually yourself who does not understand TOP policy - or simple arithmetic.

Let us say combined UBI/LVT as they propose it is actually net tax neutral for  property owners as a group ( it is not .. even before you account for vast differences in outcome within the group , reflecting value of property held .. but let us grant it ). 

So land owners will not be contributing any more net tax compared to the present ; where will the net benefit to non- land owners ( the key purpose of TOP policies ) come from  ? 

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I think I’m fairly intelligent but I don’t get this. Why tax me and then pay me for doing nothing. I don’t want to be better off from hand outs. Keep your UBI and let me invest in my home, it pays the wages of local builders, painters and roofers. It is for the warmth and enjoyment of my family not profiteering. If you have to, tax my capital gains if I ever realise the value increase, minus the expenses and interest payments. The electorate are not going to read your policies in depth. If they don’t make sense on first reading then they will stick with what they know. 

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To obtain the UBI you would probably have to apply for it. So, if you didn't want it you would not actually have to apply. However, you would not be able to avoid the land tax if one is levied. The purpose of that tax would be to take some of the unearned income accruing to landowners so that it can be shared by everyone. The UBI is probably one way of sharing it.

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The reason is simple - we don't want to give you tax burden, unless you are land hoarding.  Instead we want you to invest any extra money you have into productive enterprise.  To do this we need to create an environment where you can have enough land for your family without giving you a net tax bill.  But if you are land hoarding, your UBI will not cover your land tax bills, so you will need to pay extra.

This incentivises you to either:

  1. Sell your land, the buyer will then have the same issue, so likely they will be buying it for non land hoarding purposes
  2. Use your land as a business asset, so make productive use of it (farming/commercial buildings etc)
  3. Keep paying the LVT, but need to make up the tax burden via other productive means (i.e. you need to make more money from your current enterprises, thereby intensifying economic activity)

This discourages speculative land investment, encourages better use of land for economic activity (intensification, especially around cities) and lowers the infrastructure burden as a result (intensification means the same infrastructure can serve the more buildings etc).

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Your notion of "enough land" and "hoarding" has no relation to the value of the land and the corresponding LVT .

An average  500sqm section under a modest house in reasonably nice central Auckland  suburb is now worth 1.5M to 2M . 

The owner/occupier  of that house will certainly face a large net tax bill under TOP proposals . Are you saying he is "hoarding" land ( that cannot be subdivided BTW ) or has "more than enough" land ?

Nonsense made up to disguise the intended tax grab .. 

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Maybe you didn't notice your 3rd sentence contradicted your 1st?

Of course it has to do with the value of the land, it's a Land Value Tax.  And Value is defined by a properties location, by and large. 

Yes, those people in Auckland in living centrally may have a tax bill under an LVT.  That encourages density close to the city.  The owner occupier is unwittingly hoarding land that CAN be subdivided, or built up.  The Labour governments recent proposal to push the height of consent for development up to 3 stories was a good move, it encourages density on these properties. While you may think that it is unfair that these people would have a new tax to pay, many would describe their untaxed capital gain over the last 30 years or so unfair as well.  You show nothing to redress the latter problem, but stamp your feet about the former. 

Last time I drove through Auckland, I saw a LOT of sections being converted from single households to multi household blocks. Again a good sign. LVT would simply encourage it more.

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What if I just want the land for a bit of peace and quiet. Plant a few trees (native of course) and run a few sheep for the freezer. Pay off my mortgage and live self sufficiently. Your policy means I have to keep working to pay the increasing tax obligation. No escape from the rat race for me. Forced into a shoe box in town so that someone richer can take my place in rural paradise. Land is only for the rich in TOPs world.

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Living like Robinson Crusoe is not really possible in today's society. Others would probably like to own your land for more socially productive purposes. We should probably pay for the privilege of owning the land that we occupy. Ownership is not absolute. The land belongs ultimately to all of us as a community. 

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Go for it, get a lifestyle block and it will be zoned rural.

What if I want my own country with only 10 people in it that never have to talk to each other? Dreams are free right?

You are being obtuse if you don't think the issue is more complex than that. You having a large piece of land all for yourself has an oppourtunity cost on the other people that cannot use that land. Land also has utility, either for living or productive purposes. In many places the lifestyle block you aspire to already has limits on sizes and how much of it must be actually productive farmland.  Councils have been building in these limits for years, you can't simply use any piece of land in the country however you want, for good reason.

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I spend $500 each winter planting native trees and have a Wetland that captures the silt from all of my upstream neighbours. What does “unproductive” mean? Should I concrete it over. Does productive mean profit? I think the Tui and Kereru like the lack of “productivity”. This is a policy made up by urban dwellers who have no connection to the land. People don’t just buy land to make a profit, some of us enjoy it. My bit of dirt was cheaper than a 2 bed unit in Auckland. 

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That's totally productive land you live in then, as it's a carbon sink, under TOPs policies you would become someone who benefits as you have created new carbon sinks and you are encouraging native fauna. Essentially polluters would pay for your offsets, so you could enjoy your land and get paid for it. 

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The issues are caused by multiple property owners not by owner occupiers. Speculators drove the market up.

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Market forces drove the market up: supply and demand an all that. Speculators, if one can call them that (I would call them traders; speculators purchase and hold assets which nobody wants now, hoping to make a profit later). These"speculators" only take advantage of a market that they can see is already rising.

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For most NZdrs with long memories there is no arguable point in giving any Govt of any description any level of legitimacy in the area of wealth, death/inheritance and additional private  property/family home taxation bases, many of which were previously extant as a result of our UK tax  heritage & justifiably eliminated as the electoral quid pro quo for accepting the original introduction of GST (@10% lol)

Because it's not only TOPs policy we have to consider, it's what any successive political govt rearrangement might do with the thin end of the wedge (see GST above).

I've enjoyed reading all these comments, especially those prompted by my original  at the top of this thread. Many have been constructive. Thank you.

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it's what any successive political govt rearrangement might do with the thin end of the wedge (see GST above).

That's true, I suppose, of any proposed policy, but it's never stopped governments in the past implementing policies.

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If you can mention climate change without mentioning fossil fuels, you are incompetent to even mention it.  Leave it to the adults please.

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Interesting, innit, to see how the mere mention of an LVT brings out the extreme responses.

  • Land value is as yet undefined.  Most comments assume the value they see on their rate assessments is that value.  It need not be.  That value is essentially market related, derived from sales from near and possibly afar.
  • Unimproved value would set a value as if no improvement had ever been made.  Probably impractical but a useful thought exercise.
  • Annual value as defined in the Rating Act but confined to the land alone would be possible: equivalent to a rental or leasehold value.
  • A variation on unimproved, would be a standard rural underlying value, with standard-cost additions for land related amenities added on top.  Roads, 3 waters, lighting, reserves are obvious candidates.

The common thread through all these alternative valuation methodologies is they are not directly market related.  Rural values are conservative, constrained by Real economic possibilities for the land, so are not nearly as subject to the speculative manias which characterize urban land values.  Services to the land are typically publicly delivered, again not market driven as to reasonable valuation, and much more amenable to a standard-cost approach which further sidelines local cost quirks (Mangawhai sewerage.....).

If the valuations for land were thus derived, relatively free from the nuttiness of zoning, land banking, unearned CG, pure speculations- a lot of heat would go out of the debate.

It might also start to focus attention on the real amenity value of land.

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It’s too complicated. To win votes it needs to be easy to understand. People with a home don’t feel wealthy as they can’t spend the equity without taking on more debt (equity release) or selling up. The whole idea is a vote loser. 

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The best electoral performances by a TOP candidate occurred in my own electorate, Ohariu, where the candidate came third behind Labour and National in both the 2017 and 2020 elections. This is the electorate that Tracy Martin referred to as "the thinking electorate", and she was right.

 

 

 

 

 

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As above, making the government's revenue contingent on something it can (and indeed, already limits the supply of, much to our material disadvantage) is a huge agency issue. Wellington ticket-clipping has been shown to be more important than any semblance of quality of life in this country, so are we to believe that we wouldn't just end up with something that is extremely punitive to everyone but our finance and revenue ministers? 

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A land tax would actually discourage "ticket clipping" on land.

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I would like to see Raf Manji do a dissertation on TOP’s Population Plan and Immigration Policy and how these integrate in to their economic objectives around wealth redistribution. 

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The topic of a land tax has really hit a nerve with the speculative class. Can believe how many posts this topic generated for a party that got 1.5% on the last election.

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I wish he bullet pointed the key policies to make it clear where they stand...

I voted for these guys as they had the most sensible policies, but reading several paragraphs to get the point is not ideal

Make it clear, simple and concise!

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