OLIVER HARTWICH: Everyone is a winner with TOP
- Administrator
- Jul 17
- 2 min read
The Opportunity Party wants to be known as the party of ideas. Now polling near five percent, I decided to test one.
The party’s website offers a calculator. You enter your income and land value, and it reveals how much better off you will be under its radical tax proposal. Their so-called ‘Tax Reset’ promises a cash payment of $19,400 a year to every adult, the ‘Citizen’s Income’, funded by a 1.75 percent annual tax on land.
I tried to invent someone who would pay more net tax under the scheme. I failed.
Tenants would be way better off. They would receive the free cash but pay no land tax. That is one way of cooling the housing market.
Retirees could defer the tax until they die.
Farmers would pay just 0.5 percent, with conservation exemptions and weather deferrals.
And homeowners? Most would be better off, TOP explains, once their Citizen’s Income is factored in.
But I was determined to find a net loser. I invented a couple TOP could not possibly love, each earning $500,000, with their house on a million dollars of urban land.
Still, the calculator awarded them a net tax cut of $5,455 a year.
Why? It had charged them more income tax (because TOP wants to increase it for top earners), yet their land tax of $17,500 was no match for their $38,800 of free cash.
The tax falls only on land, not on buildings. By TOP’s own rule of thumb, land makes up 70 percent of an average freestanding home’s value. That means few couples’ land tax would outrun the free cash until their house passes around $3 million. And once introduced, land prices would fall, so the new land tax raises even less revenue.
Yet, the scheme must somehow raise $24 billion a year to pay for the ‘Citizen’s Income’. The party estimates one in ten New Zealanders will pay more.
The scheme seems to punish families with multiple earners or high land value, while rewarding those who shift their resources elsewhere. But given how seldom the calculator produces a tax increase, even that seems a stretch.
Milton Friedman warned there is no such thing as a free lunch. Indeed, the oldest lesson in economics is that somebody, somewhere, always pays. Still TOP, the party of ideas, has built a shiny policy and calculator that cheerfully disagree with him.
Perhaps they know something that Friedman missed. Or maybe it is just a policy that is not properly costed?
Dr Oliver Hartwich is the executive director of The New Zealand Initiative
With a tax tax here, and a tax tax there.
Here a tax
There a tax
Everywhere a tax tax
TOP will mandate crippling tax
Give less back in one go.
Sounds like a Universal Basic Income policy (UBI) which the Centre for Independent Studies, Sydney debunked as crazy several months ago. In NSW, land tax is thoroughly despised with agriculture being exempted and I suggest that NZ should NOT go down this trail as its a slippery slope of higher tax rates in the future by unscrupulous, dumb pollies,
Chris White
Northbridge, Sydney
"TOP, the party of ideas"
Shame they're all dumb 😎
The stupidity of their supporters is clearly demonstrated by the support within the media. Idiots like soundbites not substance.
Retirees are significantly worse off.
Deferring the land tax is not the same as paying less tax. After say a decade of deferring the tax, and the retiree's circumstances changing such that they need to move into a retirement village, the economic equation has been massively worsened potentially making such a move impossible.
And saying tenants won't pay any of the land tax through their rent is a ridiculous oversight.
"And once introduced, land prices would fall, so the new land tax raises even less revenue'.
That aspect in particular reveals their strangely disconnected thinking. Their policy 'succeeds' by reducing land value, therefore assuring a reduction in tax take, and so the failure of their associated policy plan to provide 'free money for everyone'!