ACT’s regular bulletin: Do as We Say
Free Press
ACT’s regular bulletin
Do as We Say
Once again the
Green Party has topped parliament for air travel expenses.
At an average of $6,490 per MP, they edged out the Labour
Party. The Nats averaged $5,342 each, NZ First MPs $5,291
and ACT $5,777. None of the Greens are Ministers or
electorate MPs. Where do they go, and why should we take
their environmental message seriously?
David vs.
Jacinda
In the Sunday Star-Times vs Jacinda
Ardern, David Seymour argues for a bill to be debated on
Assisted Dying. Jacinda thinks we should wait for the
select committee inquiry. Free Press agrees, but
with the Government refusing to introduce a bill, David’s
private members’ bill is still essential for the law to
change.
No New Taxes?
National
campaigned on no new taxes and will soon have introduced
three. It begs the question, why vote for a National party
that introduces new taxes like a Labour Government on
heat?
Tourist Tax
The tourism industry
is furious about the $25 arrival fee applied to visitors.
It was sold as a user charge but the Government has never
shown how it covers cost created by the user. That’s a
tax.
Capital Gains Tax
If you buy and
sell a property other than your primary residence within two
years you automatically pay tax under National’s new
bright-line test. The only difference between this and what
most countries regard as a capital gains tax is the time
period, which the opposition are already promising to
extend.
Land Tax
As Rodney Hide
writes, John Key’s land tax is political genius. It
won’t actually affect house prices, it taxes
‘foreigners’ rather than New Zealanders, it shows the PM
‘doing something’ and it partially steals another idea
off the left (why do National win power to implement their
opponents’ ideas?). Best of all, he’s only proposed it,
so he can still back out.
Acorn
Taxes
The Capital Gains and Land Taxes would
seem to make more sense if extended. The bright line test
will catch almost nobody at two years, but at ten years it
would bite. Commentators are already saying the land tax
would be a good idea if extended to all property owners.
Half-hearted taxes are a time bomb.
Great Set
Up
The National Government is setting up a tax
regime for a big spending future left wing government. If
Labour, Greens, and New Zealand First are Christian Cullen,
then National is the workmanlike Frank Bunce, feeding them
quality ball. We taxpayers are the hapless Wallabies
standing under the posts.
A Bonus
If
you are a rugby fan and have forgotten how sublime Cullen
was, you can see a compilation of all his All Black tries here. The first one is set up by Frank
Bunce.
The Purpose of Tax
ACT believes
the purpose of tax is to raise enough revenue for public
goods such as public safety with a minimum of disturbance to
the economy. National is now introducing taxes not to raise
revenue but to distort the economy. How will they know when
to stop?
Credit Where It’s Due
The
Government’s new option of Pay As You Go company taxes is
a very good move. The provisional tax system of paying
based on last year’s income is old fashioned and a cash
flow headache for smaller businesses.
Once More
with Feeling
The real housing problem is supply,
and nobody ever built a house so they could pay more taxes.
Until we start getting close to New Zealand’s all-time
record for home building (set in 1974) prices will continue
to rise.
The Elephant in the Room
The
Government could pass a law to build more homes tomorrow.
Simply remove the draconian land use planning powers of
councils and introduce financial incentives to build
infrastructure. The problem is that homeowners vote and no
government will survive a major housing market correction,
so all current policies are designed not to
work.
A Long-term Project
Home values
in Auckland are currently ten times incomes. Healthy
housing markets have a ratio of three, as did Auckland for
most of the period from WWII to the 1980s. If house prices
stayed static and incomes rose at three per cent per annum,
it would take 40 years to get back to that
ratio.
A Good Start
Six years ago a
young(er) David Seymour told an ACT conference that councils
should be given targets for house price to income ratios.
He compared it to the Reserve Bank’s regime where the
Government sets a target and the bank meets it. Last week
Bill English proposed the same thing. ACT has always been
the party of ideas.
Could it
Work?
It’s not clear if councils could really
control prices in a meaningful way. The Reserve Bank itself
is currently missing its target due to record-low global
inflation. Housing markets are influenced by immigration
and interest rates in the short run, how much tolerance
would councils be given?
Worth a
Try
Bill’s (David’s) idea is worth a try
because it at least focuses people on what the price should
be. Having a house worth ten times your income is thrilling
but dangerous, as many Americans discovered in 2008. Then
there is the fact that much of what we call poverty in 2016
can be tied back to a shortage of housing.
A Saner
Discussion
Setting a goal for housing
affordability would allow for hard questions to be answered.
Can we afford a compact city model, or is the Auckland
Council chief economist right when he says the city must
grow out? If intensification is the go, then how will
central city residents be reassured about congestion, school
zones, and community character, other than just being called
NIMBYs?
The End of the Beginning
The
land tax is too silly to be taken seriously, but with
English’s suggestion we may just have turned the corner
into a serious discussion about how and where New Zealand
will build more homes, talking prices down off the ledge
without a major correction.
ends