Homeowners face land tax of 0.5pc

A proposed land tax will be the third tax burden on homeowners if the tax working group's recommendations are passed into law.

The tax, suggested last month by the tax working group, would be 0.5 per cent of the unimproved land value.

It will be on top of rates already collected by local councils and the GST paid on those rates.

The working group has also recommended GST be increased from 12.5 per cent to 15 per cent.

Westpac research economist Dominick Stephens said this three-way tax burden may come as a bit of a surprise.

"I do think it will come as a bit of a surprise to land owners," he said. "But someone has to pay for the hospitals and the schools.

"At the moment most tax paid in New Zealand is on incomes. There is nothing to stop a person taking that income and moving to Australia. If you tax land - well, land can't move. It's a more secure means of raising revenue."

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Posted: 1 Feb 2010

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