Question

An idea that has been put forward for addressing the Auckland housing market problems is that foreign buyers should be required to pay a tax on the land they have bought. How will this improve financial stability? and What are the drawbacks of this measure?

Answer 1

● Taxes on the land purchased by the foreign buyers will improve financial stability in the following ways:

1. It will help in increase the revenue of the government.

2. There will be reduction in the number of foreign buyers in the Auckland.

3. This will create opportunity to the local buyers to purchase land and houses.

4. There is a benefits for the local buyers on purchase of land and houses i.e. they don't have to pay taxes. It means that the investment in the land and houses are tax free.

5. It will encourage the local buyers to invest more on land and houses.

6. The money in the market will again comes into the cirrculation.

7. It will creates the job opportunity in the housing market for the sellers and brokers.

In this ways this idea can help in improving financial stability.

● The drwabacks of this measure are :

a) The foreign buyers will reduce in numbers.

b) It will also decreases in the tax revenue of the government.

c) It will affect the foreign exchange of the country as the numbers of foreign buyers are decreases.