Difficult to say if land tax would cool housing market: Grimes
Motu's Arthur Grimes says it becomes more difficult once you try to target a particular section of the public that you apply a tax to.
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Hawke’s Bay
On TV One’s Q+A last week Prime Minister John Key suggested a land tax targeting non-residents.
But Motu Research Institute economist Arthur Grimes, who has done major research on land taxes, told this week’s Q+A programme last weekend it becomes more difficult once you try to target a particular section of the public that you apply a tax to.
‘Land taxes, in general, are a very sensible idea and have an effect on house prices. If we introduce a generalised land tax on everyone, then house prices would fall. We know that. Whether it is just on foreigners – then we start getting into issues of how you define that, what’s a foreigner, what’s not and what are the details of the tax. It’s much more difficult to say.
‘The difficulty comes when you’ve got trusts, when you’ve got companies – what’s the definition of a foreign company, etc, all these sorts of things – people buying on behalf of others.’
Mr Grimes told Q+A a generalised land tax is basically the same as local authority rates.
‘Local authority rates – we already have a land tax in that form, right? You just pay a certain percentage every year of the value of the land that your house is on. Now, if people know that that is going to increase, then they’ll bid less when they come to buy a house because there’s a liability attached to that. So it’s a very simple, straightforward tax that we could implement very soon.’
Tune into NBR Radio’s Sunday Business with Andrew Patterson on Sunday morning, for analysis and feature-length interviews.
Staff Reporter
Sun, 01 May 2016
Sun, 01 May 2016
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Difficult to say if land tax would cool housing market: Grimes
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