The government’s own tax experts say the government’s tax deductibility policy will do little to stop the explosion in house prices and drive up rents, National Shadow Treasurer Andrew Bayly said.
“The government’s interest deductibility policy, which goes into effect this Friday, is not just policy making at the 11th hour, but Inland Revenue has advised the government against it.
“Inland Revenue strongly opposed any option to remove the ability to deduct interest and instead endorsed the status quo, saying additional taxes on rental housing would likely not be an effective way to improve affordability. overall housing.
He also said the policy would put upward pressure on rents and could reduce the supply of new, longer-term housing developments.
“He estimates that 250,000 taxpayers will now face high compliance and administration costs, further eroding the coherence of the tax system.
“The government says the plan is to target speculators, but nothing could be further from the truth.
“In reality, this policy targets New Zealand ‘mom and dad’ homeowners, those who can only own one additional property. According to MBIE, this represents 80 percent of all homeowners nationwide.
“For the average property in Auckland, we estimate this will result in an additional $ 7,600 on the year-end tax bill per property, which for many can mean they are losing money on their location.
“This figure does not even include the money that will have to be spent on accountants and lawyers who will have to help calculate the amount of tax owed.
“Chartered accountants in Australia and New Zealand have predicted the policy, saying the measures do not correspond to good design of public policy.
“Government officials said the government’s housing tax policies – announced earlier this year – had had no dampening effect on house prices, but there was evidence of continued acceleration in growth rental prices.
“This is another ill-conceived and rushed policy, with little real input from tax experts. From Friday, each owner will pay this additional tax.
“If government policy is to force owner parents to raise rents or sell their retirement nest egg, that will work very well. But, if that hasn’t already impacted house prices, it’s unlikely to happen anytime soon.
“National will reverse this misguided change. “
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