A former Reserve Bank economist expects the National Party's foreign buyers tax plan to be sacrificed amid ongoing coalition talks with ACT and New Zealand First.
Those three parties have been in negotiations to form a government, with the three leaders — National's Christopher Luxon, ACT's David Seymour and NZ First's Winston Peters — yet to meet in the same room.
Peters told supporters on the election campaign trail that he was opposed to overturning the ban. He was part of the Labour coalition government that brought in a ban on foreign buyers of residential properties in 2018 in the first place.
Luxon wants to overturn that ban, but former Reserve Bank economist Michael Reddell said National's plan looks unlikely to go ahead.
"New Zealand First has been pretty staunch in being opposed to opening up investment in these sorts of areas," he told Breakfast this morning. "So, odds are against it."
National wants foreign buyers to pay a 15% tax on house purchases over $2 million. The party forecast the plan would bring in $740 million on average per year — but Reddell disputed that figure.
"The best modelling that we did suggested it was going to come up a long way short," he said. "Our estimates were something like $200 million a year.
"Perhaps we were wrong, but National were never willing to release their modelling so that we could check our numbers against theirs.
"So there was likely to be a significant shortfall anyway and I suspect they knew that all along."
He said it was an "important gap" in the funding for National's promise to cut taxes for low- and middle-income Kiwis.
"In overall macroeconomic terms, this wasn't a big number," Reddell added. "It's as much a political issue, I think, as an economic one.
"But they will need to find ways of re-phasing their commitments to smooth the way through to enable them to have their tax cuts."
Experts have predicted the move would see house prices rise, with real estate agents saying they saw a spike in interest from property investors after the election results.
Today, new figures from QV showed house values continue to strengthen.
Analysis: Why National's foreign buyers tax has international law risks
National's proposal for a tax on foreign buyers of residential property raises significant risks under international tax treaties, writes Professor Craig Elliffe, the director of the University of Auckland's Masters of Taxation programme.
September 3, 2023
Real estate agent Ross Hawkins said he would "absolutely" be disappointed if the policy didn't progress.
"The people that it brings in, it's the high-end buyers," he said. "They come into New Zealand, they do great things for our country."
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