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Housing, the ‘Great Income Tax Experiment’ and the intergenerational consequences of the lease

  • Royal Society of New Zealand 11 Turnbull Street Wellington, Wellington, 6011 New Zealand (map)

Speaker: Andrew Coleman is an economist who works at Otago University and is an ex Senior Fellow at Motu.

New Zealand currently has one of the most distortionary tax environments for housing markets of any country in the OECD. Prior to 1989, owner-occupied housing and savings placed in sanctioned retirement funds were taxed on an expenditure basis, whereas other assets were taxed on an income basis. This meant there was a large tax wedge between the taxation of housing and retirement funds, on one hand, and other assets on the other. After 1989, the wedge between retirement assets and other assets was closed but a large wedge between retirement funds and owner-occupied housing was opened. For the last quarter of a century, NZ’s tax environment has imposed costs on current and future generations of young people because of the way it taxes housing and other assets. This presentation will review the way New Zealand’s tax system alters the incentives to purchase property. Its purpose is to provide a wider perspective on the relationships between tax and housing markets.

BIO: Andrew Coleman is an economist who works part-time as a lecturer in the Economics Department at the University of Otago, and part-time as a policy analyst in Wellington, most recently at the New Zealand Treasury and Motu Economic and Public Policy Research. In 2010 he was a member of New Zealand's Saving Working Group. Andrew currently researches inter-generational economic issues, with a particular focus on New Zealand Superannuation, housing, and taxation. In recent work, he develops dynamic heterogeneous agent models to analyse the relationships between taxes, and urban land markets. His current work is focused on how the tax system affects the way transport infrastructure is capitalised into land values. He is also using Otago University's 1000Minds software to investigate what New Zealanders want from government pension programmes.

This seminar is held in association with National Science Challenge 11: Building Better Homes, Towns and Cities

Motu Public Policy Seminars are free to the public. No registration is required; you can simply turn up on the day. The seminars are recorded and posted on Motu's website alongside the presentation.