Q+A: Arthur Grimes interviewed by Michael Parkin
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Fiona Cumming
11:59 AM (3 minutes ago)

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Motu Research Institute Economist Arthur Grimes - difficult to say whether a land tax on foreign buyers would cool the housing market.

On Q+A last week Prime Minister John Key suggested a land tax targeting non-residents.

Mr Grimes told TV One’s Q+A programme it becomes more difficult once you try and itemise just a particular section of the public that you apply a tax to.

‘Well, land taxes in general are a very sensible idea and have an effect on house prices. If we introduce a generalised land tax on everyone, then house prices would fall. We know that. Whether it is just on foreigners – then we start getting into issues of how you define that, what’s a foreigner, what’s not and what are the details of the tax. It’s much more difficult to say.

‘The difficulty comes when you’ve got trusts, when you’ve got companies – what’s the definition of a foreign company, etc, all these sorts of things – people buying on behalf of others.’

Mr Grimes told Q+A a generalised land tax is basically the same as local authority rates.

‘Local authority rates – we already have a land tax in that form, right? You just pay a certain percentage every year of the value of the land that your house is on. Now, if people know that that is going to increase, then they’ll bid less when they come to buy a house, because there’s a liability attached to that. So it’s a very simple, straightforward tax that we could implement very soon.’

Q+A, 9-10am Sundays on TV ONE and one hour later on TV ONE plus 1. Repeated Sunday evening at 11:35pm. Streamed live atwww.tvnz.co.nz

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