There's nothing wrong with National's proposed 15% tax on foreigners buying houses in this country selling for over $2 million. But Labour's propaganda machine & our mainstream media's quoting of so-called "top economists" and "leading academic tax experts" to discredit National has gone into overdrive.
But the critics are swimming in a comedy of errors. How about Labour Housing Minister Megan Woods who said last week that before the foreign buyer ban in 2018, only 4,120 homes a year were sold to foreigners, meaning that National's tax proposals did not add up since foreigners only represent a few percentage points of the market?
Well, that number is incorrect. When the former Governor of the Reserve Bank spoke to my class during the years when Key was Prime Minister, he stated that the government had no accurate figures on the number of houses sold to foreigners. One reason (out of many) is that such deals, particularly the ones for higher value houses, are done using corporate vehicles, including trusts, where trustees, who may be partners in Kiwi law firms, have their names put on the title, even though the beneficiary is from overseas. The former Governor's view is backed up by Attorney General David Parker who also acknowledged at the time that many such transactions had not been able to be picked up by Statistics New Zealand. “The statistics we have are incomplete", he stated.
To make matters worse for Woods, Labour's own former housing Minister stirred up this controversy about the number of foreign buyers in the market in 2015:
"Labour was criticized after its housing spokesman, Phil Twyford, released figures from an unnamed real estate firm at the weekend showing 40% of houses sold in Auckland between February and April went to people with surnames it identified as Chinese". (Former Labour Leader) Andrew Little told TV3’s Paul Henry show on Monday he was satisfied the data was accurate. “It is crude, but the gap is so big that you can, I think, conclude that a large chunk of that 40% is coming from non-resident buyers,” he said.
So Megan Woods insists the percentage of foreigners buying Kiwi property is around 4% whereas her own former leader has insisted on a number closer to 40%? To turn Labour's comedy of errors into farce, although Attorney General David Parker is claiming National's tax on foreign buyers would breach NZ's international agreements, this is what the Otago Daily Times had to say about his ban in 2015:
"Labour's policy of restricting non-residents from buying property would have serious legal, economic and political ramifications because of NZ's free-trade agreement with China, lawyer Stephen Franks said yesterday .. Article 139 (of our Free Trade Agreement) would be more problematic for Labour, because it required that investors of China be treated no less favourably than investors of any third country, such as Australia ... Labour has said Australians would still be allowed to buy residential property under their policy ... "This would breach Article 139, in treating Australian investors more favorably than Chinese investors.'
Seems David Parker, Megan Woods and Andrew Little all have their knickers in a twist. Labour's (and our mainstream media's) characterization of National's plan as being "bullshit", to quote Newshub's Shamubeel Eaqub, has left me wondering whether the "bullshit" is more an apt description of our mainstream media's reporting of this issue.
Sources:
https://www.interest.co.nz/property/94482/asb-data-shows-actual-number-homes-sold-foreign-buyers-year-march-2018-likely
https://www.theguardian.com/world/2015/jul/13/new-zealand-labour-defends-claim-that-foreign-chinese-are-buying-up-houses
https://www.theguardian.com/world/2015/jul/13/new-zealand-labour-defends-claim-that-foreign-chinese-are-buying-up-houses
https://www.odt.co.nz/business/labour-policy-may-breach-fta
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi - where this article was sourced.
Well, that number is incorrect. When the former Governor of the Reserve Bank spoke to my class during the years when Key was Prime Minister, he stated that the government had no accurate figures on the number of houses sold to foreigners. One reason (out of many) is that such deals, particularly the ones for higher value houses, are done using corporate vehicles, including trusts, where trustees, who may be partners in Kiwi law firms, have their names put on the title, even though the beneficiary is from overseas. The former Governor's view is backed up by Attorney General David Parker who also acknowledged at the time that many such transactions had not been able to be picked up by Statistics New Zealand. “The statistics we have are incomplete", he stated.
To make matters worse for Woods, Labour's own former housing Minister stirred up this controversy about the number of foreign buyers in the market in 2015:
"Labour was criticized after its housing spokesman, Phil Twyford, released figures from an unnamed real estate firm at the weekend showing 40% of houses sold in Auckland between February and April went to people with surnames it identified as Chinese". (Former Labour Leader) Andrew Little told TV3’s Paul Henry show on Monday he was satisfied the data was accurate. “It is crude, but the gap is so big that you can, I think, conclude that a large chunk of that 40% is coming from non-resident buyers,” he said.
So Megan Woods insists the percentage of foreigners buying Kiwi property is around 4% whereas her own former leader has insisted on a number closer to 40%? To turn Labour's comedy of errors into farce, although Attorney General David Parker is claiming National's tax on foreign buyers would breach NZ's international agreements, this is what the Otago Daily Times had to say about his ban in 2015:
"Labour's policy of restricting non-residents from buying property would have serious legal, economic and political ramifications because of NZ's free-trade agreement with China, lawyer Stephen Franks said yesterday .. Article 139 (of our Free Trade Agreement) would be more problematic for Labour, because it required that investors of China be treated no less favourably than investors of any third country, such as Australia ... Labour has said Australians would still be allowed to buy residential property under their policy ... "This would breach Article 139, in treating Australian investors more favorably than Chinese investors.'
Seems David Parker, Megan Woods and Andrew Little all have their knickers in a twist. Labour's (and our mainstream media's) characterization of National's plan as being "bullshit", to quote Newshub's Shamubeel Eaqub, has left me wondering whether the "bullshit" is more an apt description of our mainstream media's reporting of this issue.
Sources:
https://www.interest.co.nz/property/94482/asb-data-shows-actual-number-homes-sold-foreign-buyers-year-march-2018-likely
https://www.theguardian.com/world/2015/jul/13/new-zealand-labour-defends-claim-that-foreign-chinese-are-buying-up-houses
https://www.theguardian.com/world/2015/jul/13/new-zealand-labour-defends-claim-that-foreign-chinese-are-buying-up-houses
https://www.odt.co.nz/business/labour-policy-may-breach-fta
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi - where this article was sourced.
1 comment:
The only problem with the idea is it should include all houses. After all Hogk Kong has similar stamp duty rules for non permanent residents, including those from mainland China.
As for treating China differently, we should have the same rules they have for us. No purchase of land, ever.
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