"My grandmother owns her villa but lives on the pension. You'd tax her out of her home."
This is the strongest objection, and any serious LVT design answers it the same way: deferral as of right. Any owner-occupier over 65 (or on low income) can elect to have the tax accrue against the title instead of being paid in cash, settled when the property is eventually sold or inherited. No one is ever forced from their home. The community still collects — just later.
Deferral schemes like this already run today in parts of Australia, Canada, and the United States for property taxes. And remember what she gets in exchange: her pension, her savings interest, and her family's wages become entirely tax-free.
"What about Māori land?"
This objection helped stop the 2010 Tax Working Group's land tax, and it deserves a straight answer, not a footnote. Much Māori freehold land is collectively owned, often can't be sold under Te Ture Whenua Māori Act, generates little cash income, and carries a history in which rating and taxation were repeatedly used as instruments of alienation. Applying a standard LVT to it would repeat that history.
The answer is categorical, not cosmetic: Māori customary land and Māori freehold land under Te Ture Whenua Māori Act are excluded, full stop — as much of it already is from council rates under the Local Government (Rating) Act 2002. The land column targets value created by the surrounding community and captured through the market. Land that is legally inalienable and collectively held sits outside that logic, and outside this tax. The design must be worked through with Māori from the start, not adjusted afterwards.
"Land prices would fall. You'd wipe out people's equity."
Partly true, and it's the honest cost of the reform: a tax on land rent capitalises into lower land prices. Buildings keep their value — it's the speculative premium on the dirt that deflates. Who wins and who loses from that?
Everyone who doesn't yet own land wins: every renter, every first-home buyer, every young family. Owner-occupiers who stay put mostly notice nothing — the home is the same home, and their wages are now untaxed. The genuine losers are those holding land as an investment, especially with heavy leverage — which is why the transition must be slow and pre-announced (Canberra is twenty years into exactly such a transition), so prices adjust gradually and nobody who bought last year is ambushed.
New Zealand should be clear-eyed about this: we spent thirty years treating rising land prices as wealth creation. It was mostly wealth transfer — from the young to the old, from renters to owners, from workers to speculators. Ending that is not a side effect. It's the policy.
"Landlords will just pass the tax on to renters."
This is the one objection economics answers outright: no, they can't. Rents are set by supply and demand for accommodation, not by landlords' costs; the supply of land is perfectly fixed, so a tax on its value can't shrink supply and therefore can't raise rents. New Zealand's 2010 Tax Working Group put it plainly: the burden "would be borne by land owners at the time the tax is announced and cannot be passed on." The Australian housing agency's review of Canberra's transition found the same thing in practice: no evidence the higher land rates created rental pressure.
Meanwhile LVT actively increases housing supply, because it makes holding zoned land idle expensive: empty sections and land banks come to market. More homes, same demand — rents fall.
"Farmers own lots of land. Wouldn't this destroy farming?"
Farmland is worth a lot in total but very little per hectare — the value of New Zealand land is overwhelmingly concentrated under its cities. And under the architecture the farmer pays no income tax, and nothing on the new shed, the irrigation, or the herd — all of which are improvements or capital, not land value.
The farm that struggles under LVT is the one held for capital gain rather than production — the land bank at the city fringe priced at subdivision value. That land either gets developed or gets sold to someone who'll use it. Again: that's the policy working.
"Valuing bare land separately from buildings is guesswork."
In some countries this would be a real problem. In New Zealand it is already solved: under the Rating Valuations Act 1998, every rateable property in the country receives an official land value, distinct from its improvements value, at least every three years, audited by the Valuer-General. Councils have levied rates on exactly this number for over a century. Your own land value is printed on your rating notice right now.
"GST is regressive — leaning on it hits the poorest hardest."
First, be precise about what changes: nothing. The architecture keeps GST at exactly its current rate and base — nobody's supermarket bill moves by a cent. What changes is that the tax on work disappears, and the lowest income tax rates are paid by definition by the lowest earners: today a minimum-wage worker hands over 10.5–17.5 cents of every extra dollar before they ever reach the checkout. Under the architecture they hand over nothing.
Second, look at who holds the base that replaces it. Land value is far more concentrated among the wealthy than either income or consumption — a renter on a low income pays no income tax, no LVT, and the same GST as today. It is hard to design a more progressive swap than "untax wages, tax landholdings."
Third, if Parliament wants to compensate low-income households further, the architecture doesn't stop it — transfers and public services are spending decisions, and the design deliberately leaves the how much and for whom to democracy. It constrains the tax base, not the welfare state.
"If GST is the growth dial, won't governments be tempted to just raise the rate?"
They can — in public, in a Budget, with a number attached, the way the 2010 rise from 12.5% to 15% was legislated and litigated at an election. That is the point of the design: the only ways to raise more revenue are visible rate changes or actual growth. Compare that with today's silent mechanism, where inflation drags wages across bracket thresholds and collects billions without any Minister announcing anything.
A single-rate GST is also self-limiting politically: because everyone pays the same rate on everything, a rise costs every voter at once. There is no "tax somebody else" coalition to assemble.
"Keep taxing companies but not people, and companies will flee New Zealand."
The privilege charge is today's company tax at today's 28% rate — no company's bill rises by a dollar under this architecture, so there is no new reason to leave. Meanwhile every other part of the reform makes New Zealand dramatically more attractive to enterprise: staff cost less to hire (no PAYE wedge), founders and investors pay nothing on dividends or gains, and reinvested profits compound untaxed at the personal level.
And the charge is well-anchored. A third of it is paid by roughly 800 large foreign-owned groups that are here for New Zealand's customers, resources and land — things that don't relocate. A company genuinely determined to avoid the charge can already leave under current law; at 28%, close to the OECD norm, almost none do.
"With no personal income tax, won't everyone hide their income in a company?"
Run the arithmetic the other way. Today people incorporate to get a lower rate (28% vs a 39% top personal rate). Under the architecture the personal rate is zero — routing your untaxed wages through a company would add a 28% charge to income that was already tax-free in your own hands. The century-old sport of income-shifting between persons, trusts, and companies doesn't get harder to referee; it goes extinct, because the arbitrage now runs backwards.
People will incorporate for the real reason the privilege exists — limited liability — and pay for it. That's the system working as designed.
"The executive-pay deductibility rule is anti-business meddling."
The rule imposes no cap, no mandate, no tribunal. It removes a subsidy: today the tax system quietly discounts executive compensation relative to reinvestment, because both are deductible but only one concentrates at the top of the company. The proposal makes ordinary wages fully deductible and executive pay (defined mechanically — named officers, top thresholds) non-deductible, then leaves boards entirely free to pay whatever they judge the market requires — at the shareholders' full expense rather than partly the public's.
The empirical record is honest here too: the US §162(m) experience shows deductibility limits alone don't shrink pay packages. The purpose is neutrality, not control.
"With no income tax, the rich pay nothing."
The rich pay differently — and arguably more reliably. Wealth in New Zealand is held overwhelmingly in property; large landholdings attract LVT every single year, with no realisation event to defer, no loss to harvest, no trust to interpose, no residency to shift. Large consumption attracts GST. Owning the companies means the privilege charge is paid before profits arrive.
What stops being taxed is effort — the surgeon's overtime and the checkout operator's Saturday shift alike. What keeps being taxed, permanently and unavoidably, is holding valuable pieces of New Zealand and spending money in it. A tax system that can't be planned around is worth more than one with high sticker rates and an avoidance industry.
"Why not just add a capital gains tax like every other country?"
A CGT taxes the gain only when an asset is sold, so it rewards holding forever (lock-in), collects revenue in unpredictable lumps, exempts the family home for political survival (gutting the base), and still taxes people for building things — the gain on a house you built is mostly your own effort and capital. Two New Zealand tax working groups and two governments have now failed to land one.
LVT taxes the same unearned windfall — community-created land value — but annually, on an already-valued base, with no realisation games and no penalty on construction. The Mirrlees Review's ranking is the standard answer: land value taxation first.
"This is a huge change. What if the arithmetic is wrong?"
Check it — that's what the data room is for, and every series links to the government file it came from. The load-bearing numbers are few: $121.1b of revenue (audited), $66.4b of it from income on people and savings (audited), a ~$1.5t private land base (Stats NZ), GST and company tax behaviour over thirty years (Treasury outturn data). The load test is deliberately static and deliberately editable, and its honesty clauses are printed under it, not in a footnote nobody reads.
And the transition is the safety factor: staged over decades, pre-announced, recalibrated as land prices respond — the way the ACT is actually doing it right now. Find an error and we'll correct it publicly.
"If this is so good, why hasn't anyone done it?"
Most of it has been. New Zealand ran a national land tax for 114 years and most of our councils rated on land value for most of the twentieth century — the full record is in the single tax provenance section. Denmark and Estonia tax land today; Canberra is mid-transition from stamp duty to land rates; Texas and Delaware have charged corporations for their privileges for over a century; and New Zealand's own GST is the world's proof that a clean consumption tax is possible.
What hasn't been done is assembling the pieces into one architecture and removing the income tax they make redundant. The pieces are all field-tested. The assembly is the proposal.
Good. Bring your own numbers.
Run the calculator on your own rating notice, set your own rates in the load test, and open the source files in the library. The whole point of this tax base is that it's checkable.