Robertson mulls value capture tax
Finance Minister Grant Robertson has signalled that property owners benefiting from the building of the Auckland rail links could be subject to a ‘‘value capture’’ tax.
Speaking at the Auckland Chamber of Commerce/ Massey University annual finance lunch at the Pullman Hotel in Auckland yesterday, Robertson said the Government was investigating ‘‘innovative’’ ways to bridge the funding gap to pay for the rail and roading infrastructure the country needs, especially in Auckland.
‘‘Between the balance sheets of the Auckland Council and the Government, we still don’t have enough,’’ Robertson said.
‘‘Minister Phil Twyford and I are actively looking at opportunities for how to do that.’’
Those options included ‘‘value capture’’ which the Productivity Commission championed early last year. This is a process under which a special tax is levied on property owners deemed to have benefited new infrastructure.
‘‘If we are going to make big investments in things like [Auckland’s City] Rail Link, and a series of different rail links, people will benefit from that. How do we capture the value of that, and use that to fund the development?’’ Robertson said.
In March last year, the Productivity Commission gave an example of how that might work.
If the land value of a property benefiting from a new rail link increased in value from
$100,000 to $250,000 over five years – a 150 per cent increase compared with a rise of 120 per cent in land values in the wider area – a tax could be levied on the $30,000 gain attributable to the infrastructure improvements.
The tax could be levied alongside rates, the commission suggested.
It’s not the only way household personal finances could change in a bid to find the money to build infrastructure. KiwiSaver could also be impacted.
Responding to a question from Sam Stubbs, founder of the Simplicity KiwiSaver scheme, Robertson said: ‘‘We want to see that [KiwiSaver] capital invested as much as possible here.’’
KiwiSaver was predicted by Treasury to reach $200 billion by
2030, just 12 years away. Robertson envisaged ‘‘packaging up’’ infrastructure projects in ways KiwiSaver funds could invest in.
‘‘I think New Zealanders will love the idea of their savings, or a greater proportion of their savings going into projects in New Zealand. What we have got to make sure is those projects are packaged up in a way that they give the rate of return that people want.’’
Robertson detailed the Government’s economic plan, saying the focus was on ensuring all New Zealanders shared in economic growth.
‘‘If we don’t harness the potential of every single New Zealander we will never be the country we should be,’’ he said.