The National Party has long hailed itself as the party for the economy, but its economic credibility is hanging by a loose thread as neither National Party leader Christopher Luxon nor deputy leader Nicola Willis can answer how they’ll deliver their foundational election promise.
National’s central election policy is a $14.6 billion tax cut over four years. A foreign buyers’ tax will fund a part of this tax cut. A 15 per cent tax will apply to houses sold for more than $2 million to foreign buyers.
National figures show it believes a government can extract $740 million on average per year from the foreign buyers’ tax to pay for tax cuts. That amounts to $2.96b over four years – and makes up about 20 per cent of National’s $14.6b tax cut.
The foreign buyers’ tax is National’s most significant source to fund its tax cut. If that doesn’t work, its plans fall short. It is vital voters know how the party will deliver this.
To make up $740m in tax annually, National will need to sell houses worth at least $4.9b annually – worth almost $20b in four years.
To put that into perspective, in 2022, the sale of all $2m-plus houses in New Zealand totalled $11.5b.
If the house sales figure from 2022 were to repeat itself in 2024, foreign buyers would need to buy more than 40 per cent of all the $2m-plus houses for National to extract $740m in tax.
There is just one problem: before the Labour, NZ First and Greens government banned foreign buyers in 2018, foreign buyers bought approximately 3 per cent of New Zealand houses sold per year.
The gap between how much tax National hopes to raise and how much these numbers suggest will be snared is astronomical. The numbers are stacked up like Jenga; any moment now, they will fall apart. It is not unreasonable to think National just can’t deliver on its promise.
Willis says she doesn’t think it necessary to release full modelling demonstrating how National will sell nearly $20b of houses to foreign buyers in four years.
Luxon says National has released all it is going to release. As for releasing the detailed modelling on how the party will sell enough houses, Luxon says, “I don’t need to. I don’t need to.”
I think he does. I am not an economist, but I’d need to be a fool to fall for these figures. Luxon wants to be our prime minister and Willis our finance minister, but neither can assure us that they will successfully deliver on one of their main election promises.
Luxon’s responses to questions about his proposed foreign buyers’ tax are abysmal. He ducks every question and waffles and laughs his way through them. All these things point to one thing for me: National will lead us into economic trouble.
If National’s foreign buyers’ tax fails, there will be a massive gap for the taxpayers to fill every year. Many may find themselves waving goodbye to their meagre weekly tax cut.
National could shut up all the critics by simply releasing its modelling, but its insistent refusal is beginning to create doubt about whether it knows what it is doing.
Shaneel Shavneel Lal (they/them) was instrumental in the bill to ban conversion therapy in New Zealand. They are a law and psychology student, model and influencer.