Luxon vows to immediately throw out property taxes
Interest deductibility is a legitimate business expense everywhere round the world, it is not a tax loophole. Christopher Luxon
National leader Christopher Luxon says Labour’s tax changes for investment properties would be gone “immediately” if his party won the 2023 election.
Treasury forecasts published at the Budget on Thursday estimated this would cost $490 million in 2024 and $650m in 2025.
The party has four key planks to its tax policy, but it has been coy about when they would be implemented — saying only that it would be in its first three-year term.
Luxon wants to adjust tax brackets at a cost of $1.7 billion, axe the 39 per cent top tax bracket at a cost of about $600m, and bring the bright line test back to two years.
Landlords had previously been able to deduct interest costs from their tax bill, like other businesses. However, the Government removed this ability last year, arguing it gave landlords an advantage when it came to buying homes over owneroccupiers as landlords would have lower real interest costs.
Answering questions in a postBudget speech organised by Grant Thornton, Luxon said the interest deductibility changes would be gone “immediately”.
“Interest deductibility is a legitimate business expense everywhere round the world, it is not a tax loophole — it’s had a huge impact and it’s lifted rents $50 at a time when we need more housing security,” he said.
Luxon said under the previous National government wages had risen faster than costs.
He said under this Government, wage growth often was outpaced by inflation.
“Under 19 quarters of this Government, I think 10 ten them we’ve actually had inflation ahead of wage growth,” Luxon said.
Wages have grown higher overall than costs — however this year costs are growing far faster than inflation.