Because our lax tax system lets them cheat on their taxes:
Why would an overseas buyer pay more for an asset than a New Zealander? Is it because they can accept lower returns on capital? Perhaps. Is it because they can sweat the asset more? Again, perhaps. But Chalkie reckons one reason stands out - tax.
There are huge tax advantages available to overseas investors that simply cannot be accessed by locals. They crank up the returns available to foreign buyers and make New Zealand assets worth more to overseas owners than to New Zealand residents.
The article uses Wellington Electricity Distribution Network, which has paid virtually no tax due to being piled with high-interest, related-party debt to a company in a tax haven by its foreign owners, but the practice is apparently widespread. The result is both that we get bought out of our own country because NZ assets are more valuable to foreigners than they are to us, and meanwhile our government gets starved of revenue by tax-cheating sociopaths.
There is an easy solution to this: put the effect on taxation in the Overseas Investment Act. If foreign ownership would see less tax paid in NZ, then that's a reason to refuse a transaction. Simple.
