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John MacDonald: Taxing times for the $740 million man

Author
John MacDonald,
Publish Date
Tue, 14 Nov 2023, 1:11PM
Photo / Sylvie Whinray
Photo / Sylvie Whinray

John MacDonald: Taxing times for the $740 million man

Author
John MacDonald,
Publish Date
Tue, 14 Nov 2023, 1:11PM

National may as well just come out now and say its tax plan is history. It’s toast.  

Because, as we all knew it would - and as National should have known - the good old NZ First handbrake is proving to be the fly in the ointment in the coalition talks. 

And it appears National’s idea to partially fund tax cuts by letting foreign buyers back into the housing market and charging them a 15 percent tax for the privilege of buying a place with more than $2million is proving to be the big stumbling block. 

Not that the incoming Prime Minister is saying that. Mr Mergers and Acquisitions is pressing-on, telling us it’s all going well.  

But, maybe for the first time ever, I’m actually thankful for the NZ First handbrake. Because I always thought the foreign buyers idea was nutbar. 

I thought it was nutbar - not because I’m necessarily opposed to foreign buyers - but because National is dreaming thinking it could get that much revenue from foreigners buying expensive houses here.  

National said that it could raise $740 million a year taxing the foreign buyers. Which pretty much every economist and expert, right from the start, questioned.  

But, oh no, before the election we had the party’s finance spokesperson saying she’d stand down if the tax cuts weren’t delivered. Not that bluster is unusual to National or any political party. Especially at election time. “Rock solid”. That was the line Luxon used every time he was questioned about the numbers behind the tax plan. 

Now I don’t know if you’ve noticed, but Christopher Luxon is still saying this week that the promised tax cuts will be delivered, but he’s now started saying that the way they are paid for may change as a result of the coalition negotiations with ACT and NZ First. 

And let’s not leave ACT out of this, either. Because David Seymour has been very sceptical of the tax plan too.  

About three weeks before the election he looked at the Government’s books - which were opened for all the world to see in the Pre-Election Fiscal Update (or the PREFU, as it’s also known). ACT looked at those numbers and said ‘ hold on a minute’. 

It had been keen for us to pay less tax as well. But, after seeing the state of the finances, it decided that now is not the time for significant cuts. That’s exactly what ACT said: “Now is not the time for significant tax cuts”. And I agreed 100 percent then. And I agree 100 percent now. 

So National has got an uphill battle on its hands. In fact, I think it’s a battle that - if it hasn’t lost it already - it will have lost by the time the signatures go on the coalition deal. 

Because without the money from the foreign buyers tax, they’ll need to find $740 million from somewhere else - per year. Not just $740 million once. But per year. 

As tax expert Geoff Nightingale said on Newstalk ZB this morning, it could mean deeper cuts in the public sector if the foreign buyers element is torpedoed in the coalitions talk. Or more borrowing. 

The whole thing has been smoke and mirrors from the start. Remember all the fuss about how many people would actually get the full saving National had been banging on about. It turned out - not long before the election - to be about 20,000 households that would get the full whack. 

Everyone else would get the crumbs.  And now, it seems, the chickens are coming home to roost for National in the coalition negotiating room.  

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