Changes to taxation for landlords have blown out in cost and taken the Government’s tax plans with them said CTU Economist and Director of Policy Craig Renney. “At the election, the ³Ô¹ÏÍøÕ¾ party claimed that the return of interest deductibility would cost $2.1bn. Now we discover it’s going to cost nearly $800m more”.
“This Government appears to have its priorities all wrong. It is committed to fattening the wallets of landlords, but it won’t commit to feeding hungry children in schools. There is no economic evidence that shows this tax cut will lead to lower rents. But there is plenty of evidence that nearly $3bn could make a huge difference to the state housing waitlist, or to those seeing their benefits cut in real terms”.
Renney said “This adds to the problems that ³Ô¹ÏÍøÕ¾ had in opposition making its tax plan add up. This blow-out for landlords needs to be added to the $1.35bn missing from welfare indexation savings. The potential $3bn from foreign buyers has gone, and the cost of indexing income tax changes is likely to be much higher than forecast.”
“This will likely mean deeper cuts to essential public services to pay for this plan. That in turn will impact every community around New Zealand. These are huge sums of money that could be invested in those with the very highest needs. Instead, it’s simply going to inflate the housing market again and force first home buyers to the sidelines”.
Renney said “It’s not too late to change. This tax change will go through the House very soon, but the Government could withdraw the bill and explain to New Zealanders why nearly $3bn needs to be spent in this way, instead of rebuilding the 350 schools that have been paused. It’s time to change track and invest in New Zealand, not landlords.
