National's shaky tax scheme has received a further blow after it’s been revealed that John Key received advice when he was Prime Minister that the scheme being proposed by National couldn’t be done, Labour Finance Spokesperson Grant Robertson says.
“It’s clear now that National did not do their homework and have a hole the size of billions in their costings which means they won't be able to deliver the tax cuts they are promising,” Grant Robertson said.
“John Key had an army of officials working for a year on ways to take heat out of the housing market. Reports from 2016 quote Key and a spokeswoman from his office saying that one option looked at was whether New Zealand could impose a one-off stamp duty on foreigners who wanted to buy New Zealand homes.
“However, Key and his office were clear that the advice said it wasn’t possible to do this under New Zealand’s double tax agreements. For this to happen, some Kiwis would also have to be caught in the net; the only way to impose a one-off tax on foreign buyers was if eligibility was based on whether someone wasn’t a New Zealand tax resident – which some Kiwi expats are not.
“It was not possible to devise a one-off tax on foreign buyers determined by tax residency with an additional carve out for New Zealanders.
“The problem for Christopher Luxon and Nicola Willis is, that’s exactly what their proposal is: Willis has said eligibility will be determined by tax residency and Luxon has said it will only apply to foreigners.
“Since John Key’s comments, New Zealand has upgraded its Double Tax Agreement with China, including a non-discrimination clause. Chinese citizens made up 36% of pre-2018 buyers before the foreign buyer ban was put in place, meaning a third of potential buyers under National’s plan wouldn’t be covered by the tax. That’s a billion-dollar hole right there.
“It has become clear over the past two weeks that Christopher Luxon and Nicola Willis’ tax policy has no credibility. They keep asserting it’s ok, while the evidence is piling up that their dodgy scheme can’t work.
“Luxon and Willis need to release their full costings, assumptions and background legal advice. They must have received written advice, and they must release it, because it obviously goes against what government officials told John Key.
“This is a test of Christopher Luxon’s economic credibility. He is giving the impression he doesn’t care about putting Kiwi taxpayers and our exporters at risk. New Zealand trades on its global reputation and can't be seen to be breaking the spirit of our international agreements.
“It is just not credible for Luxon to walk away from press conferences when it all gets a bit much. All this does is it shows that National have something to hide. It’s time to front up,” Grant Robertson said.
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