Renters are being priced out of “skyrocketing housing market” in an “unfair system,” says party leader
The Opportunities Party (TOP) has called for the income tax of renters “locked out of an unaffordable housing market” to be removed from their KiwiSaver earnings.
In a statement, TOP said that homeowners have a tax-free investment in their property – and renters “who are being priced out of a skyrocketing housing market should at least have income tax removed from their KiwiSaver earnings.”
Read more: Party calls for extension of freeze on rent increases
Geoff Simmons, party leader of TOP, said that it’s a symptom of an “unfair system that those with the privilege of owning a home aren’t paying tax on property investments, yet renters and prospective first home-buyers are having their KiwiSaver investments taxed, especially as often these investments are going towards their deposit for their first home.”
“Isn’t it just insanity that the wealth holders in New Zealand, property owners, are being granted a tax-free investment in their property, yet renters and those saving for a deposit on their first house are having that deposit taxed?” said Simmons. “We need to give renters the same tax-free investment that homeowners have and stop taxing renter and non-homeowner KiwiSaver investments.”
KiwiSaver investment schemes invest member contributions, aiming to generate returns on the investment. The money that the investment earns is then taxed by Inland Revenue, at a prescribed investor rate of between 10.5% and 28%.
The 2018 Census showed that over one in three households are renting.
Additionally, TOP pointed out that the latest data from Statistics New Zealand showed that the country’s GDP had officially contracted by 12.2% in the June 2020 quarter – the same period house prices rose by 3.1%, according to the data from the Real Estate Institute of New Zealand (REINZ).
“That increase in house value is tax-free income for homeowners, especially those with multiple properties, which ultimately renters are paying for when landlords put their rents up,” said Simmons. “Homeowners also get the benefit of living in their home tax free, while renters have to pay rent out of their post-tax income. Currently, there is no tax-free investment on offer for renters who are having their home-buying deposits taxed, while also paying off someone else’s tax-free property investment. Given that an entire generation has little hope of ever owning their own home, it is only fair that they should have a tax-free investment option.”
“The least we can do is remove the tax on their KiwiSaver earnings,” said Simmons. “Especially if the government is just going to continue to ignore the housing crisis that keeps homeownership out of their reach anyway.”
