Land tax fails to...with farmers

Federated Farmers is concerned the Government is too focused on slicing the tax pie ever smaller, rather than growing the New Zealand economy. The Federation is especially concerned at proposals for a land tax that could farmers $525 million.

“I’ve got to ask, what’s happened to the working group on growing the New Zealand economy?” says Philip York, Federated Farmers economics and commerce spokesperson.

“Tax reform is part of the journey and not the journey itself. Instead of devoting so much energy to slicing our tax pie even smaller, the focus must be on how to grow the economy larger.

“I know tax reform supporters will argue reform will encourage enterprise, but can anyone tell me how taking $525 million off farm businesses will grow exports? That’s the effect of a 0.5 percent land tax on a agricultural taxable land base of $105 billion.

“Farmers are asset rich but our farms are inevitably income poor. According to the latest Ministry of Agriculture and Forestry outlook report, farmers are seeing 93.8 percent of the export income we earn go into everyone else’s pocket but ours.

“And that’s before tax so do you think farmers will stand for this? I think not.

“If the Government wants to export - farmers that is - then this is the right way to go about it. If the Government wants to grow the economy, then water storage infrastructure along with rural broadband, aquaculture and minerals is the way to go.

“I’d also take issue with the claim that land taxes are not widely used in New Zealand. Kiwis already have a land tax and that’s called local authority rates. These massively impact everyone. We’ve got many farmers already paying more than five figures and a few in the six-figure club.

“On the positive side, Federated Farmers does support the goal of making 27 percent the top rate for personal, company as well as trust tax, but the starting point must be to get the size of government right and fund tax cuts through savings in government spending.

"Aligning tax rates at 27 percent is a no brainer that will help boost productivity and competitiveness. It will let taxpayers save, spend and invest more of their hard earned money. Alignment is also about reducing incentives that see so much time and effort put into minimising tax.

"A bigger economy and a smaller Government would easily fund tax cuts without needing to dream up new and scintillating ways to take money off people.

“The focus must be on growing the economy instead of screwing more money out of those who make it for the country. We’ve got some great ideas on that too," Mr York concluded.

For a sample of Federated Farmers suggestions on how to catch Australia click here.