There is alot of unproductive property out there, conservation lands, Maori land, that would be politically unpaletable to tax. Productive farming and commercial land typically generates income, and that is already taxed. Residential real estate is the obvious target. A universal land tax would be easy to administer, but might disadvantage several low income groups who don't receive any benefit from income tax reductions.
The purpose of suggesting a property tax is the need to broaden the tax base, and also to discourage our investment appetite for residential property. But this can be achieved through tightening the existing rules around the tax treatment of investment properties. Loss of income on investment properties should be ring fenced. Any taxable activity should be expected to generate a profit at some stage. An investor could choose to carry forward losses to the future income of their property, but should not be able to reduce their own personal income.
Factoring in a capital gains tax might help offset any depreciation claims, and ensure the tax is paid during sale and purchase, rather than while the asset it lying idle. Another option is to increase stamp duty. NZ has an incredibly low house sale stamp duty compared to Australia, but also a very low first home grant. If NZ increased stamp duty, this would go some way to taxing property, but it would only apply when cash changes hands, and not when land lays idle.
Posted: Monday 22 February 2010
★★★★★Perhaps taxing all wealth rather than income would make more sense. Property that can be sold is an asset, is a form of wealth, and should be taxed. If Maori land is guaranteed to never be sold then it need not be taxed.Posted: 2011-04-12 19:38 by Happyfunball