JD
Time to stop fawning over TOP as the bright young things of New Zealand politics and take a look at how much of a threat they pose to the peace of mind, financial wellbeing and, by extension, the health of every Kiwi pensioner.
TOP makes several claims including:
“Fairness and efficiency sit at the heart of the Tax Reset.”
“Most homeowners will be better off once their Citizen’s Income is factored in.”
“No one who relies on NZ Superannuation will receive less than they currently do under the Tax Reset.”
Some of which are debatable and some, as we shall see, are blatant lies.
As this article focusses on the effects of the TOP tax policies on the pensioners of NZ, let us first establish the basic facts.
According to the 2023 Census there are 828,000 Kiwis aged over 65, and approximately 655,000 own the homes they live in.
The average value of a NZ house is $912,000 and $520,000 of that is the value of the land the house sits on.
Currently they pay rates on these houses, on average between $3,000 and $4,000 per year.
A single pensioner nets $28,870 pa and so has around $480 per week to live on after paying their rates.
A married couple nets $44,420 pa and so lives on around $393 each per week after paying their rates.
Now TOP rides into town, with its plans for Universal Citizen’s Income paid for by a Land Tax of 1.75 per cent per year.
The implication is that this Universal Income of $19,400 pa paid out to every adult will offset most of the Land Tax they pay and therefore promote “fairness and efficiency”.
But, and this is a big but, the Universal Citizen’s Income for pensioners is not an addition to their pension, it is simply a yearly substitution for $19,400 of that pension. So no pensioner will get a cent more than they are currently receiving.
However, they will have to pay the new Land Tax, at an average of $9,000 pa extra outlay, on top of the rates paid on every pensioner’s house in NZ.
Let that sink in. If you’re a pensioner, then your disposable income drops like a stone.
For the single person, your $480 per week in hand after your rates bill now becomes $314 per week after paying the new land tax on top of it.
A married couple with $393 per week each after rates are paid, now gets $307 per week after the land tax is added.
I don’t think anyone believes the over-65s are living high on the hog with pensions. Knock another $9,000 per year off and it will be back to candlelight and gruel for many (which will, no doubt, please the Greens).
TOP’s claim that “No one who relies on NZ Superannuation will receive less than they currently do under the Tax Reset,” might, on the surface be true, but at the bottom line, it’s a lie, pure and simple.
Can you also imagine the effect this will have on the peace of mind of NZ’s pensioners, suddenly faced with finding an extra $9,000 or more per year on top of the huge $3,000–$4,000 plus the taxes they already pay?
It would be no surprise if the stress associated with these impossible demands is, quite literally, a killer for some.
And let’s not assume, because as many as 60,000 pensioners live in retirement villages where they don’t usually own the land under their units, that they won’t be affected.
There are over 490 retirement complexes, at an average land area of eight hectares. The TOP Land Tax could run to as much as $250m per year, or anywhere between $3,000 and $6,000 per unit. These are costs that the village operator will simply pass on to the residents in the form of increased fees. Not as much as the average house owning pensioner, but nonetheless hugely significant in terms of its effect on disposable income.
And this is yet another factor of this tax. If disposable income drops by $9,000 per year for the average single pensioner or married couple, then all the industries that cater to the elderly, in particular travel and hospitality that together employ over 320,000 Kiwis, will suffer a huge drop in demand, followed by massive layoffs and increasing unemployment. (Although the cynical would say that at least there will be more people depending on the TOP Universal Income payout, so that might lock in their voter base somewhat. How convenient.)
But, coming back to the Land Tax itself, TOP says: hang on, if you can’t afford to pay the tax, then you can defer it and let it build up, with interest, each year against the price of your house when you sell it or otherwise dispose of it.
And this is true, but to what effect? Again, using the average house value of $912,000 and a conservative interest rate of five per cent pa, then in 10 years you will owe the TOP government $115,000 and in 20 years this becomes $300,000.
This is an imposition – a tax on the property you worked all your lives to buy – a property that you want to pass on to your children when you die. But when you do, it will carry with it that deferred tax burden, forcing your family to either find the money from elsewhere to pay it or sell the house to raise that money.
So, effectively, when you are gone, TOP wants to take hundreds of thousands of dollars from your kids, so they can give it to other people’s kids in the form of a $19,400 per annum Universal Citizen’s Income – irrespective of whether those kids have worked for it and deserve it or not – and neither you, your family, nor any other pensioner over the age of 65, get any say in that decision.
This is income redistribution at its most punitive – effectively both an old people’s tax and/or a death tax all rolled into one.
If ever there were a policy that is crying out to be campaigned against, this TOP plan, to literally ‘top’ the elderly, is surely it. And it is tailor made for NZ First to take up.
Winston, this is right in your wheelhouse, hurting your core constituent group much more than anyone else and a great opportunity (pun intended) for you to take back your kingmaker crown, whilst pointing out, in detail, what these young socialists are planning to do to them.
The key question is – are you listening?
