PHOTO: National leader Christopher Luxon and soon to be Finance Minister Deputy leader Nicola Willis. GETTY/NEWSHUB
As coalition negotiations between the National Party, ACT, and New Zealand First continue, a former Reserve Bank economist anticipates challenges for National’s foreign buyers tax proposal. Despite National leader Christopher Luxon‘s desire to overturn the ban on foreign buyers, the likelihood of success appears slim, according to expert Michael Reddell.
The ongoing discussions involve leaders Luxon, David Seymour of ACT, and Winston Peters of NZ First, who have yet to convene in the same room. Peters, a member of the Labour coalition government that implemented the ban in 2018, has expressed opposition to its reversal.
National’s proposed 15% tax on house purchases exceeding $2 million is expected to generate $740 million annually, as per the party’s projections. However, Reddell disputes this figure, citing undisclosed modeling by National and estimating a potential shortfall.
“The best modeling that we did suggested it was going to come up a long way short,” Reddell stated, emphasizing the lack of transparency in National’s data. He highlighted the potential impact on National’s commitment to tax cuts for low- and middle-income citizens, identifying it as a significant gap in funding.
While acknowledging the comparatively modest macroeconomic impact, Reddell emphasized the political and economic aspects of the issue. He suggested the need for National to reevaluate and re-phase their commitments to navigate potential challenges in implementing tax cuts.
Experts have also warned that the proposed tax could lead to an increase in house prices, with real estate agents reporting heightened interest from property investors following the election results.