Friday, October 10, 2014

A mansion tax for New Zealand?

Scotland has just exercised its devolved taxation powers for the first time, replacing stamp duty - a tax on all house sales - with a "mansion tax": a higher tax on expensive ones. Which raises the obvious question: why don't we do this here?

Labour proposed a capital gains tax, but it sunk at the polls in the face of a sustained fear campaign. Its probably a non-starter for next term. So why not simply make it transparently about sticking it to the rich, and tax those insanely inflated house-prices in Auckland?

According to REINZ, 368 houses sold for more than a million dollars last month - about seven percent of the total. Taking ten percent of that would raise roughly half a billion dollars annually to spend on health, education, and housing for ordinary kiwis. Setting the threshold at a million would ensure that most kiwis would never have to pay it (you could introduce a lower, progressive rate at $750,000 - well above the national median house price - but that would mean it was widely paid in Auckland).

A mansion tax would raise revenue from those most able to pay by taxing a social bad. What's not to like?