KIWI PARTY POLICY ANNOUNCEMENT: 50% GST

Refund on New homes

The Kiwi Party
Press Release
24 March, 2010

Kiwi Party leader Larry Baldock and finance spokesperson Gordon Copeland today announced a pre budget policy to address the negative impacts of the foreshadowed rise in GST to 15%. The Kiwi Party calls on the Government to refund 50% of the GST paid on a new home up to a combined cap of $300,000 per home and section.

“In 2009 consents were issued to build just 14,425 new houses, including apartments, the lowest number of consents in a single year since records began in 1966,” said Mr Copeland”

“This is way below what we need. Our population grew rapidly during 2009 including net inward migration of 21,300, with many kiwis returning home when jobs became scarce in the UK and elsewhere as a result of the global financial crisis. As a result we now have a lot of catching up to do with several economists saying that we need to build some 28,000 homes each year for the next several years to replenish our housing stock.”

“Given these realities the Government’s announced intention to increase the GST to 15%, which will include new homes, is simply the wrong policy at the wrong time. It will discourage new home building by increasing the cost of the average new home by $6,000, plus additional GST on the price of the section, furniture, carpet, curtains etc., at the very moment when we should be doing the exact opposite.”

“The average cost of a new home consented in 2009 was $270,000, including GST of $30,000 at the current 12.5% rate. That price will increase to $276,000 and the amount of GST to $36,000 per home when the rate goes up to 15%. In addition new home builders will pay extra GST on the purchase of the section on which to build the house. At current prices that could be a further outlay of $150,000 and extra GST of $3,333 when the rate rises, meaning an all up increase, house and section, of $9,333”

“Our policy is to refund to all new home buyers 50% of the GST paid up to the $300,000 cap on the purchase of a section and the building of a house. At 15% the GST on $300,000 will amount to $39,130 and the 50% refund will be $19,565. The refund will be less where the combined price of the house and section is less than $300,000”

“The refund would be available to all new home buyers but limited to one refund per couple (or 50% of that amount for an individual), per lifetime.”

“This will incentivise new home building and create a much needed stimulus to our economy. It will create new jobs and by bringing the supply of houses back into balance, make homes more affordable for first home buyers.

“These dynamics could limit the fiscal cost of the policy with the amount of the refunds being offset by the extra GST and income tax collected on the additional new homes built,” said Mr Copeland.

Party leader Larry Baldock said the Kiwi Party is passionate about rebuilding an ownership society by putting home ownership within reach of every NZ family.
“The positive social and economic benefits of this are well researched and understood. We believe it is the right policy at the right time and has the potential to assist our nation and its families at this critical time” he said.

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