Could a 1.75% land tax, compulsory KiwiSaver and a $370 weekly Citizen’s Income fundamentally change how New Zealanders build wealth? The Opportunity Party, led by Qiulae Wong, is proposing a major shake-up of New Zealand's tax, housing and retirement systems, but what would these changes actually mean for homeowners, property investors and everyday Kiwis?
The Opportunity Party's 1.75% Land Tax: Who Really Pays?
New Zealand has a longstanding obsession with property investment, but is that helping or holding back the economy?
According to Qiulae Wong, too much of New Zealand’s wealth is tied up in residential property rather than investments that contribute to productivity and economic growth.
The Opportunity Party wants to change that by introducing a 1.75% annual land value tax, calculated on the value of land rather than the buildings or improvements sitting on it.
The intention is to discourage land banking, encourage property development and redirect investment towards businesses, shares and other productive assets.
Unlike a capital gains tax, which generally applies when an asset is sold, a land tax would create an annual expense regardless of whether the property changes hands.
Wong believes this would encourage landowners to develop unused land rather than simply holding it and waiting for capital gains.
However, James questioned whether New Zealand could successfully introduce a tax of this scale, given the limited examples of comparable land taxes overseas.
While Wong pointed to land taxes in Australia and Scandinavian countries, she acknowledged that New Zealand’s economic circumstances are different and that introducing the policy would require a carefully managed transition.
Could a Land Tax Force Landlords to Sell or Increase Rents?
One of the biggest concerns surrounding The Opportunity Party’s proposal is its potential impact on property investors and tenants.
Landlords already face significant costs associated with mortgage repayments, interest, insurance, maintenance and rates.
Adding a 1.75% annual tax on land value could make some rental properties financially unviable.
James questioned whether the policy would discourage people from becoming landlords, particularly when investors are already managing substantial ownership costs.
Mike raised an even bigger concern: what happens to the tenants if landlords can no longer afford to own their rental properties?
Drawing on his experience providing rental accommodation to lower-income households, Mike explained that some investors could have little choice but to sell.
And many of the tenants living in those properties wouldn’t necessarily be in a position to purchase their own homes.
If landlords begin exiting the market, there are questions about whether the Government and community housing providers could increase housing supply quickly enough to accommodate displaced renters.
Wong believes a land tax could eventually contribute to lower property prices, reducing the cost of purchasing rental properties and potentially bringing rents down.
However, Mike challenged whether that outcome was realistic, particularly during the transition.
If landlords face additional costs, some may increase rents rather than absorb the expense themselves.
The concern is that a policy intended to improve housing affordability could initially create additional financial pressure for renters.
What About Developers and Existing Homeowners?
Mike also questioned whether the land tax could discourage property development.
Developers already face significant costs associated with purchasing land, obtaining consent and completing construction.
If construction costs increase or market conditions deteriorate, an additional annual tax could make some projects financially unviable.
Wong explained that The Opportunity Party has proposed pausing the land tax during consenting and construction to avoid penalising developers who are actively creating additional housing.
But developers aren’t the only ones who could be affected.
James highlighted the position of first-home buyers who purchased near the peak of the property market in 2021.
Some have already experienced substantial declines in property values, with others facing negative equity.
If a land tax places further downward pressure on house prices, these homeowners could find themselves in an even more challenging financial position.
Wong acknowledged these concerns, drawing on her own experience of purchasing a home in 2020 and carrying a substantial mortgage.
However, she believes the longer-term consequences of maintaining the current housing system also need to be considered.
If house prices continue rising faster than incomes, future generations could find homeownership increasingly difficult to achieve.
How Would the Land Tax Be Introduced?
Recognising the potential disruption, The Opportunity Party has proposed introducing the land tax gradually over ten years.
Wong suggested the tax could initially be set at 0.25%, allowing the Government to assess its impact before making further increases.
The intention is to give homeowners, investors and developers time to adjust rather than introducing the full 1.75% tax overnight.
However, the biggest question remains whether a gradual transition would be enough to prevent unintended consequences for property owners and renters.
Citizen's Income: Who Benefits and Who Pays?
Alongside the land tax, The Opportunity Party wants to introduce a $370 weekly Citizen’s Income for almost all adults.
Unlike the current benefit system, which involves income assessments and eligibility requirements, the payment would be broadly available regardless of employment status.
Wong believes this would provide greater financial security, particularly for people struggling with living costs, while reducing the administrative burden associated with the welfare system.
The party estimates that under its combined land tax and Citizen’s Income proposal:
- 70% of New Zealanders would be financially better off.
- 20% would experience little overall change.
- 10% would pay more.
Those paying more would generally include households owning expensive properties or substantial property portfolios.
Wong believes this redistribution could help lower-income households get ahead while encouraging wealthier New Zealanders to diversify their investments beyond property.
Could a Citizen's Income Increase Inflation?
One of James’ biggest concerns is whether redistributing money towards lower-income households could create additional inflationary pressure.
The Opportunity Party argues that because the land tax would help fund the Citizen’s Income, the policy wouldn’t inject substantial amounts of new money into the economy.
However, James questioned whether that necessarily means spending would remain unchanged.
Higher-income households may have money sitting in savings, term deposits or investments, while lower-income households are more likely to spend additional income on everyday essentials.
Even if the total amount of money in the economy remains relatively unchanged, could shifting it towards households more likely to spend it increase consumer demand and inflation?
Wong acknowledged that this was a consideration and emphasised the importance of introducing the policy gradually.
The party has suggested a ten-year transition, potentially beginning with younger age groups before expanding the Citizen’s Income more broadly.
Compulsory KiwiSaver and the Future of Retirement
The Opportunity Party also supports making KiwiSaver compulsory, with contributions of 6% from employees and 6% from employers.
Wong believes New Zealand needs to strengthen its retirement savings system rather than relying so heavily on NZ Superannuation.
She pointed to Australia’s retirement savings system as an example of how compulsory contributions can help people accumulate wealth while creating substantial pools of investment capital.
James was particularly supportive of this direction, highlighting the potential for larger KiwiSaver funds to invest in New Zealand businesses and infrastructure.
However, higher compulsory contributions could create challenges for households already struggling to cover their everyday expenses.
Wong acknowledged this concern but argued that the proposed Citizen’s Income could provide households with greater financial breathing room, making it easier to save for retirement.
Should KiwiSaver Still Be Available for First-Home Deposits?
One of the more contentious aspects of Wong’s approach is her position on first-home KiwiSaver withdrawals.
The Opportunity Party’s current proposal does not include allowing people to withdraw their KiwiSaver savings to purchase their first home.
Wong believes KiwiSaver should primarily support retirement savings and questioned whether making it easier to access deposits simply encourages people to take on more debt.
However, Mike offered a different perspective.
As a mortgage adviser, he sees the benefits of helping people enter the property market earlier.
For many first-home buyers, purchasing a home isn’t simply about capital gains. It’s about housing security, starting a family and establishing greater independence.
Mike questioned whether requiring a 20% deposit is necessarily better than allowing someone to purchase with a smaller deposit, provided they can afford the repayments.
Wong agreed that housing security is important but argued that homeownership shouldn’t be the only way to achieve it.
The disagreement comes down to whether the priority should be helping people purchase homes sooner or addressing the underlying cost of housing.
What Happens to NZ Superannuation?
With New Zealand’s ageing population placing increasing pressure on NZ Superannuation, Wong believes strengthening personal retirement savings should come before making significant changes to the current system.
Otherwise, changes such as increasing the eligibility age or introducing means testing could unfairly affect people who haven’t had sufficient time to build their own savings.
She suggested that a citizens’ assembly could help New Zealanders consider the trade-offs involved and develop a longer-term approach to retirement funding.
Building a More Productive New Zealand
Beyond tax and retirement policy, The Opportunity Party wants to encourage greater investment in innovation and business growth.
Wong highlighted New Zealand’s relatively low investment in research and development, citing expenditure of approximately 1.5% of GDP compared with an OECD average of 2.7%.
She believes this limits the ability of New Zealand businesses to grow, compete internationally and create higher-paying jobs.
The party wants to expand access to research and development tax credits, strengthen connections between businesses and universities, and provide greater support for companies looking to scale.
However, Mike questioned how these policies would benefit everyday businesses rather than just large technology companies and research institutions.
Wong explained that the party has also proposed smaller grants of approximately $5,000 to $10,000 to help businesses invest in technology, automation and productivity improvements.
Artificial intelligence is another area Wong believes could create significant opportunities for New Zealand.
While Mike was optimistic that AI would create new types of employment, Wong expressed concern that the speed of adoption could result in job losses before new opportunities emerge.
However, both recognised the potential for AI to improve productivity and create new products and services.
For Wong, the priority is ensuring New Zealand takes advantage of these opportunities rather than falling further behind.
Key Takeaways
- The Opportunity Party wants to introduce a 1.75% annual land tax, designed to discourage land banking, encourage development and redirect investment towards more productive assets.
- The impact on landlords and renters remains a major concern. Mike and James questioned whether additional ownership costs could force investors to sell properties or increase rents, potentially placing greater pressure on lower-income tenants.
- Existing homeowners could also be affected. James highlighted the risk of further property price declines for first-home buyers already dealing with reduced equity.
- A $370 weekly Citizen’s Income would provide broadly available financial support, with the party estimating that 70% of New Zealanders would be better off under its combined tax reset.
- Inflation is another important consideration. James questioned whether redistributing money towards households more likely to spend it could increase consumer demand and inflation.
- The party supports compulsory KiwiSaver contributions of 6% from employees and 6% from employers, aiming to strengthen retirement savings and reduce future reliance on NZ Superannuation.
- First-home KiwiSaver withdrawals remain a point of disagreement. Wong wants to prioritise retirement savings, while Mike emphasised the financial and lifestyle benefits of helping younger New Zealanders purchase homes earlier.
- The biggest challenge is managing the transition. While the policies aim to improve long-term affordability, financial security and productivity, their impact on existing homeowners, investors and households would need to be carefully considered.
Next Steps:
Want to dive deeper into The Opportunity Party’s policies? Explore their plans and what they’re proposing for New Zealand here.
If you’d like to watch more, check out this episode below.
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Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
