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Land Taxes and Revenue Needs as Communities Grow and Decline: Evidence from New Zealand

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Author Info

  • Suzi Kerr

    ()
    (Motu Economic and Public Policy Research)

  • Andrew Aitken

    ()
    (Motu Economic and Public Policy Research)

  • Arthur Grimes

    ()
    (Motu Economic and Public Policy Research)

Abstract

New Zealand is unusual in that nearly 60% of local services are funded from property taxes. These are a mixture of land taxes, capital value taxes, annual rental value taxes and uniform general charges. We explore the efficiency and equity of this system at both national and local levels. We find that the national property tax base is large relative to spending needs but that the variance in per capita tax bases across territorial local authorities is probably greater than is efficient or equitable. We find that land taxes are more progressive than capital value taxes. Our research also addresses local authorities' ability to provide services as their property tax base changes as a result of external economic shocks. We consider the occurrence of and responses to "fiscal stress" in a system of local government that is heavily dependent on property taxation. We provide some examples of the wide range of actual responses by local councils faced with similar population changes. Finally, we offer some tentative conclusions and implications both for New Zealand local public finance and for the use of property taxes, and particularly land taxes, more broadly.

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Bibliographic Info

Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 04_01.

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Length: 50 pages
Date of creation: Jan 2004
Date of revision:
Handle: RePEc:mtu:wpaper:04_01

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Keywords: New Zealand; local government; property taxes; land taxes;

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References

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Citations

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Cited by:
  1. Arthur Grimes, 2005. "Intra & Inter-Regional Industry Shocks: A New Metric with an Application to Australasian Currency Union," Macroeconomics 0509019, EconWPA.
  2. Arthur Grimes, 2005. "Regional and Industry Cycles in Australasia: Implications for a Common Currency," Macroeconomics 0509020, EconWPA.
  3. David C. Maré, 2005. "Indirect Effects of Active Labour Market Policies," Working Papers 05_01, Motu Economic and Public Policy Research.
  4. David C. Maré & Michelle Poland, 2005. "Defining Geographic Communities," Working Papers 05_09, Motu Economic and Public Policy Research.
  5. Arthur Grimes & Suzi Kerr & Andrew Aitken, 2004. "Bi-Directions Impacts of Economic, Social and Environmental Changes and the New Zealand Housing Market," Working Papers 04_09, Motu Economic and Public Policy Research.
  6. Steven Stillman & David C. Maré, 2008. "Housing Markets and Migration: Evidence from New Zealand," Working Papers 08_06, Motu Economic and Public Policy Research.
  7. Arthur Grimes & Andrew Aitken, 2005. "What’s the Beef with House Prices? Economic Shocks and Local Housing Markets," Urban/Regional 0509011, EconWPA.

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