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Strange as it probably seems to you, dear reader, but occasionally on Mott The Hoople and Ian Hunter albums there are songs I just don’t like. In 1976 Hunter was in New York recording his second solo album and, coincidently, Queen were in a next door studio; one thing led to another and the Queen members did backing vocals on the song You Nearly Did Me In. Which I don’t like.
The reason Hunter and Queen were recording in America is because of the incredibly stupid taxes in Britain at the time; a 98% top income tax rate. The way around this was to record outside the UK and then the album and its royalties were not deemed ‘local’ by the taxman. What it meant in reality was the UK taxman collected 98% of, well, nothing. The whole system was stupid and, curiously, the socialist Chancellor Denis Healey, who had introduced these taxes, ‘repented’ in his old age and accepted that his tax policies had snuffed out investment in Britain.
Anyhoo, this socialist tax caper of having symbolic tax rates which collect no money in order to appeal to a stupid, ignorant, envious – (“...we showed ’em brovvers..”) – group of losers who vote Labour, is endemic in New Zealand too. The main reason they do this is because Labour politicians are spoilt rich kids (Hipkins, Ardern, Robertson etc); their voters are greedy and selfish (fighting each other at the foodbank for scraps off the floor), and nobody is a businessman.
Why this matters is simple – businessmen seek to get the best deal; know they seldom get 100% of what they want but prefer 70% of a lot than 100% of nothing. I shall give you an example of what I mean and in doing so, solve the housing crisis.
Your favourite Capitalist would offer incentives for building new housing, and make housing consequently ‘affordable’, by offering incentives for leasehold land. It would go something like this:
1. Leasehold ground rents would be fixed at $1 plus GST per square metre, per year.
2. So a quarter acre section would cost $1000 plus GST per year in rent in perpetuity.
3. There would be an annual inflation adjustment of the rent, but no more.
4. Ground rents would themselves be tax-free for the first 10 years.
5. To encourage everyone with a spare 5 acres to change it to leasehold and get 30-odd houses built on it.
One of the main problems with housing is the extraordinary price a section costs. As most of these chaps are businessmen; make it worth their while to retain ownership, take a long term view of the land ownership, and trouser “money-for-jam” rents. It would not take much to change the mindset – (“visualise your great-grandchildren still pocketing annual ground rents”) – from selling sections for a quick profit to long-term ownership and its benefits.
When you can simply sign here, here, and here; pay $800 plus GST for the first year ground rent on the section; and get your friendly builder gets cracking on your new house, I doubt we will have a housing crisis much longer.
There are a number of trade offs; the government gets GST on the ground rent and vast numbers of houses being built at affordable prices – but no silly ‘capital gains taxes’; the landowners get rents in perpetuity but can’t charge stupid amounts. Homebuyers get their house, but not the land ownership. Everyone ‘gets’ what they want, but also gives up something they want. You’re welcome.
