GST Increase Disastrous for First Home Buyers
GST Increase Disastrous for First Home
Kiwi Party finance spokesperson Gordon Copeland says that today’s increase in GST to 15% will increase the cost of a new house and section by around $9,330 making housing even less affordable than it is already.
“The average cost, including GST, of new houses and apartments consented in 2009 was $270,000 and if you add a further $150,000 for the section the all up cost was around $420,000.The extra GST on that, at the 15% rate, will amount to $9,333 ” said Mr Copeland.
“There is no way that the income tax reductions announced in today’s Budget, less the extra GST paid on day to day living costs, will come anywhere near compensating for that massive increase. For example if those earning around the average household income are $23 per week or $1,285 per year better off as a result of today’s announcements, it will take them more than 7 years to find that extra $9,333! That means waiting longer or borrowing more for a new house.
“Frankly when it comes to new home building this is the wrong policy at the worst possible time. New building permits last year, at just 14,425, were at their lowest level since 1983 and as a result we now have a housing shortage in New Zealand”
“The economic ramifications of the hike in GST on new housing are clear.
“It will both reduce new housing starts and by reducing supply, force up the cost of all housing, whether new or second hand. It will see the residential housing sector shed jobs with further job losses in the manufacturing and retail sectors which supply building materials, furnishings, carpet etc., and it is all so unnecessary.
“The Government should have, and could have, adopted the Kiwi Party’s suggestion of allowing new home buying couples to claim back, from the IRD, 50% of the GST paid on the first $300,000 cost of a new house and section to both offset the GST increase, and to increase housing affordability.
“This would have transformed the economic equation. It would result in more houses being built and by increasing supply, reduce the cost of all housing. It would create new jobs. It would increase the government’s net revenue with more people in the workforce paying income tax and increased GST, and see less people on the dole.
“In short this is a time to stimulate new housing construction not dampen it. It is an opportunity lost”.