Chch will feel brunt of land tax change

Press, 28 July 1989, Page 5

Chch will feel brunt of land tax change

By

PATTRICK SMELLIE

Provincial centres — and Christchurch — will bear a far greater brunt from land tax in the future, because of Budget changes announced last evening.

From March next year, every land-owning business will have to pay land tax. In a surprise move, the Government last evening made public relief for those already paying the tax, yet it will axe the existing $175,000 exemption level from March, 1990. Reform will take place in two stages. The existing rate of 2 per cent will fall to 1.5 per cent for the next payment due, on October 7, and will be reduced to 1 per cent in March, 1990, with the abolition of the exemption. The changes are expected to give the Government an extra $135 million in tax revenue in the 1990-91 financial year, but a loss of revenue after that, since higher-valued commercial buildings will be taxed at a lower rate. This year, an extra $9O million will be collected. No announcement was made on more regular valuations for land tax purposes. Pressure for land tax reform came principally

Land tax

from owners of Auckland and Wellington central business district land. They found themselves paying land tax based on valuations taken before the sharemarket crash, and the consequent property market slump. The tax will apply to public and local authority land for the first time, and will apply to virtually all commercial and industrial land uses. The Minister of Revenue, Mr Caygill, said the moves were consistent with other Government tax reforms which lowered tax rates and broadened the base from which tax was collected. Farming and forestry land will continue to be exempt. Mr Caygill said the Government would review land tax again in the light of its moves towards a capital gains tax. A report on capital gains tax was still intended for release later in the year.