Morgan calls for tax on home ownership
Millionaire economist Gareth Morgan’s new political party has property speculators in its sights, with a plan to introduce a levy on home ownership.
The Opportunities Party (Top) says its policy - the first since its launch last month will ensure Kiwis are taxed more fairly, with any increase in revenue offset by a reduction in income tax.
At a press conference outside Prime Minister John Key’s house in the Auckland suburb of Parnell yesterday, Morgan said the policy was squarely aimed at Key and other millionaires (himself included).
‘‘John Key and I are both pretty wealthy people but we don’t pay our fair share of tax. Now only because we don’t have to, there’s nothing dodgy going on. But the tax system is very biased,’’ he said.
He said his plan was a ‘‘pretty radical’’ change to the current tax system.
It was designed more as a Robin Hood-style approach of taxing the rich and giving tax cuts to lower income earners, he said.
‘‘There’s only 20 per cent of people who won’t be better off and they will hate me. And that’s fine.’’
Under his proposal, he would personally be taxed an extra $350,000 per year, if the tax rate was 5 per cent.
That was a price he was willing to pay, he said, but admitted it would meet some very strong resistance from other high-income earners.
He said he has discussed the plans with Labour and National, but there was little appetite for change.
The reason he said was because of ‘‘the inertia of establishment politics’’.
‘‘This is just too hot to handle. And so no establishment politician, who only cares about their career or their party being in power, they won’t take this on and so they’ve allowed it to get worse and worse.’’
In a statement on its website, Top said the current tax system ‘‘favours owners of capital and unjustly burdens wage earners’’.
People who bought and lived in a house received the benefit of ‘‘free accommodation’’ without being taxed, while those who rented it out or put their cash in the bank had to pay tax on their income.
Only taxing the cash income from assets, rather than the intrinsic value of owning them, had ‘‘in effect given a handout to property owners’’, Top said.
Instead, the party would put in place a ‘‘minimum rate of return’’ on housing and land. People who already declared that level of income would not be affected, while those who didn’t would have to pay more.
Top estimated that about 80 per cent of Kiwis would be better off as a result of the policy, while the 20 per cent that wouldn’t ‘‘can well afford it’’.
Homeowners older than 65 would be able to pay the tax through a mortgage to Inland Revenue, which would be paid once ownership of the house changed to avoid ‘‘cashflow issues’’.
The new system would be put in place gradually to ensure house prices remained stable.
Morgan said he had no interest in the machinations of the National Party leadership battle and said he was willing to work with anyone to get his tax plan implemented.
‘‘It’s of no interest to me really. All I’m interested in is policy. I don’t give a stuff about who I’m talking to as a politician.
‘‘I could work just as easily with Labour as I could with National.’’
Echoing Donald Trump, he said the policy would ‘‘make New Zealand fair again’’.
The party said the policy was ‘‘nothing like a capital gains tax’’, which were ineffective at stopping property speculation.
‘‘This is an annual levy [like rates] and what it’s doing is making income tax fair.’’
It acknowledged the move would be a cultural change, but believed people would be able to ‘‘separate their own self-interest from the matter of what’s fair and reasonable’’.
‘‘While the propertyowning group is a big one, the implications of an ever-rising property to income ratio is that future generations will struggle to rent let alone own, businesses will be starved of the investment capital they need to grow and create jobs, our reliance on foreign debt will keep rising and inequality will get worse,’’ Top said.
The reforms ‘‘[would] not collect even one additional dollar in tax’’, with any increased take used to reduce income tax. - Fairfax NZ