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10 eJTR 573 (2012)
Land Taxation: A New Zealand Perspective

handle is hein.journals/ejotaxrs10 and id is 581 raw text is: eJournal of Tax Research (2012) vol. 10, no. 3, pp. 573-588 Land taxation: a New Zealand perspective Jonathan Barrett and John Veal* Abstract This article considers land taxation from a New Zealand perspective. The theory underpinning land taxation is first sketched, along with the legislative history of land taxation in New Zealand and contemporary local arrangements. Generally accepted tax criteria are then applied to land tax proposals; other relevant concerns are also considered. It is concluded that, as a substitute for capital gains tax, which New Zealand does not current levy, a national land tax has little to offer but, as a radical alternative to income tax, a national land value tax deserves greater consideration. 1. INTRODUCTION Land taxes have a long theoretical pedigree and, historically, a particular resonance in Australasia. Australia enacted a federal land tax in 1910 that coexisted with State land taxes until 1952.' Currently, save for the Northern Territory, land taxes are levied at a State level; local council rates are also charged.2 New Zealand introduced a national land tax in 1878 that was not repealed until 1992.' Currently, only local authorities levy land taxes.4 While land taxes at a sub-national level are considered 'natural', they have fallen out of favour as national taxes in Australasia. However, in 2010, New Zealand's Tax Working Group recommended a national land tax,5 as have international agencies.6 Why has there been a resurgence of interest in a tax that was considered obsolete long before its abolition? First, it is widely accepted that government measures are needed among Organisation of Economic Cooperation and Development (OECD) member countries to mitigate inequality. Inequality in New Zealand has increased since the land tax was * School of Business, Open Polytechnic, New Zealand. Contact: Jonathan.barrett@openpolytechnic.ac.nz or john.veal@ openpolytechnic.ac.nz. See the Land Tax Assessment Act 1910 (Cth) and the Land Tax Abolition Act 1952 (Cth). For a historical analysis of land taxes in Australia, see Cynthia Coleman and Margaret McKerchar, 'The History of Land Tax in Australia' in John Tiley (ed), Studies in the History of Tax Law, 4 (Hart Publishing, 2010) 281, 281-295. There is no constitutional impediment to a federal land tax; the reservation of land taxation to the States in the 1950s was driven by practical considerations. Ibid. 2 See Land Tax Act 2004 (ACT); Land Tax Act 1956 (NSW); Land Tax Act 2010 (Qld); Land Tax Act 1936 (SA); Land Tax Act 2000 (Tas); Land Tax Act 2005 (Vic); Land Tax Act 2002 (WA); and sundry local government Acts. 3 See 2.2 below on the legislative history of land taxes in New Zealand. 4 See 2.3 below on the rating system in New Zealand. 5 Victoria University of Wellington Tax Working Group, A Tax System for New Zealand's Future: Report of the Victoria University of Wellington Tax Working Group (Centre for Accounting, Governance and Taxation Research, Victoria University of Wellington, 2010) ('Tax Working Group'). 6 See, for example, International Monetary Fund, New Zealand: 2011 Article IV Consultation (International Monetary Fund, 2011) 14. 7 See, generally, Angel Gurrfa 'Tackling Inequality' (2011) 287 (Q4) OECD Observer 3.