Fed Farmers hits out at land tax idea

Most farm land would fall under the $20,000 per hectare value suggested as a threshold for any land tax, says Federated Farmers. Photo / Dannevirke News

Federated Farmers has hit out at the Tax Working Group's recommendation for a land tax, saying the tax could cost farmers NZ$525 million annually.

The group's report released yesterday, suggested a land tax of 0.5 per cent across all types of land. But it also suggested a 'value-per-hectare' threshold, below which no land tax would be collected.

Federated Farmers economics and commerce spokesperson Philip York said he attended the Tax Working Group's conference, and he understood the value-per-hectare threshold to be NZ$50,000.

Most farms in New Zealand would fall below that threshold, he said.

But York said Federated Farmers was approaching the proposed threshold with caution as increasing land values, over time, could push farms into the tax paying bracket.

"And once they set it up they might change their minds and say [the threshold] is $20,000 per-hectare," he said.

York said a $50,000 value-per-hectare threshold would leave most farmers in New Zealand exempt from paying a land tax.

But he said his own situation, with a farm close to the city, would probably see his land's value causing him to pay the 0.5 per cent tax.

York said farmers were asset rich, but inevitably income poor.

"According to the latest Ministry of Agriculture and Forestry outlook report, farmers are seeing 93.8 per cent of the export income we earn go into everyone else's pocket but ours," he said.

York said the Government should be trying to grow the economy larger, rather than "devoting so much energy to slicing our tax pie even smaller".

He "took issue" with the idea that land taxes were not already collected in New Zealand.

"Kiwis already have a land tax and that's called local authority rates ... We've got many farmers already paying more than five figures and a few in the six-figure club," York said.