Advocates of Kiwi policies like the “Auckland miracle” to end the housing crisis through upzoning whole swathes of the city might be tempted to follow another policy called for in a new petition: capital gains tax. A new petition to impose this tax on personal homes claims the wealthiest 311 families in Aotearoa (New Zealand) pay 9.4 per cent of their income in taxes, while the majority of everyday people pay over 20 per cent.
The Auckland “miracle” has featured strongly among proponents of deregulated zoning, in Sydney at least, as a way to “fix” the housing problem. Though as Planning Institute of Australia New South Wales president Sue Weatherley told the audience at our Let’s Hack Housing forum on Thursday night last week, house prices climbed stratospherically high in the last few years while nothing in planning changed at all. Go figure!
But hot on the heels of a lack of logic mixed with a lot of hot air and spin (the usual combination these days) the stories of the so called Auckland miracle keep coming.
At LHH Nicole Gurran professor of urban and regional planning pointed out that what’s not said about the “miracle” is that at the same time as the upzoning the nation also experienced a “rollback” in negative gearing alongside the significantly high interest rates at the same time.
More details from the event to come. But in the meantime we’ve just heard that the country is raising support for a capital gains tax in Aotearoa.
A petition was launched on Monday by Tax Justice Aotearoa calling on the leaders of all the nation’s political parties to consider a capital gains tax to “level the playing field” of the current tax system, highlighting the urgent need for more revenue to fund essential services and infrastructure.
The advocacy group’s chair Glenn Barclay said there had been “growing support for a capital gains tax from a range of individuals and organisations in the media in recent weeks and it is timely to give the public of New Zealand the opportunity to express their support too.”
Here’s the petition in full, in case the admirers of the “Auckland miracle” are keen to follow another Kiwi innovation:
We all want thriving schools and early childcare centres, warm and dry homes, and a strong healthcare system to live healthy, full lives.
We get these vital public services through sharing our resources into a collective pool – this pool is our tax system: we all contribute, so that we can all flourish.
But right now, our public services are crumbling. The combination of successive governments not allocating enough resources to them, while at the same time allowing the wealthy to avoid contributing their fair share, means our public services can’t meet our collective needs. As a result we’re struggling to build new hospitals or get new ferries, or hire enough nurses, doctors, teachers and social workers.
IRD research shows that the 311 wealthiest families in Aotearoa effectively pay 9.4 per cent of their overall income in taxes, while the majority of everyday people pay over 20 per cent.(1) This isn’t right.
A capital gains tax is an important pillar of a balanced tax system that ensures everyone contributes a fair share of the income they make to the collective pool. By increasing the resources going back into the pool, we will then be able to allocate more to our public services – our schools, hospitals and more.
Right now, income from selling assets isn’t taxed like our income from salary or wages. This means that a lot of wealthy people who make money from buying and selling assets, like investment properties, don’t contribute a fair amount of the profits they make to our collective resource pool.
Buying and selling homes is being treated as a get-rich-quick scheme for people who already have access to wealth. For example, a person can sell a home that they don’t even need to live in and instantly make four times what an average person earns during a year, without paying any tax at all. (2)
This is very different to the vast majority of countries worldwide, including all of those we most frequently compare ourselves to, who already have a capital gains tax in place.(3) We are lagging behind.
Polling last year showed that a majority of people in Aotearoa are in favour of a capital gains tax – while support continues to grow across different sectors calling for this to change, most recently from ANZ CE Antonia Watson, Mainfreight Founder Bruce Plested and PWC tax partner Sandy Lau. (4) (5)
It’s time to strengthen our collective pool so we can allocate the resources our public and community services need to help families and communities flourish!