The Opportunity Party’s proposed land value tax could impose substantial annual costs on homeowners and farmers regardless of their income or ability to pay, tax expert Troy Bowker has warned.

Bowker, executive chairman of Caniwi Capital Partners, described the party’s wider tax and welfare package as a “significant and high risk policy experiment” which he believed could cause serious damage to New Zealand’s productive economy.

Speaking to Sean Plunket on The Platform, Bowker said the critical difference between the proposed land tax and a capital gains tax was that property owners would face a bill every year.

The Opportunity Party is proposing an annual tax of 1.75 percent on the unimproved value of urban land and 0.5 percent on rural land.

A capital gains tax is generally paid when an asset is sold for a profit. Under the proposed land tax, owners would face an annual bill regardless of whether the value of their property had increased or fallen.

“You pay it regardless of the value, so the value can be up or down, and it’s a cash expense out of your income every single year,” Bowker said.

At a rate of 1.75 percent, land valued at $800,000 would attract an annual tax bill of $14,000.

Land valued at $1 million would generate a bill of $17,500 every year.

Bowker said those costs would be added to mortgage repayments, council rates and other household expenses.

He said the tax would not take account of changing personal circumstances. “You pay this every single year regardless of your income and your personal circumstances.”

“You could be unable to pay it because you’re out of a job, but Opportunity is going to tax you anyway every year.” Bowker said the policy could create serious cash flow problems for retirees and other homeowners who owned valuable land but had limited incomes.

Some homeowners who could not meet the annual cost could defer the payment, with the accumulating liability recovered when the property was sold or following the owner’s death.

Bowker compared that arrangement to a government held reverse mortgage against the value of the home. “They will take it out of the value of your house on death or sale,” he said.

“Deferral does not remove the liability. It accumulates a large liability to be paid against the property on sale.” Bowker described the proposal as severe because the tax would not be directly connected to income or available cash.

“Most people regard a good tax as one where you can afford to pay it because it’s based on some form of ability to pay,” he said. “This has got no reference at all to your liquidity or your cash.”

Bowker also warned the tax could drive down property values by making land more expensive to own. “It will collapse property prices because you’re going to make them so unaffordable no one can buy them,” he said.

“The supply and demand for real estate is going to be significantly adjusted because of this tax.” He said falling land values could also reduce the amount of revenue collected through the tax.

Bowker said the consequences for farmers and food producers could be even more serious. Although rural land would be taxed at the lower rate of 0.5 percent, he said high land values meant the annual bills could still be substantial.

Bowker calculated that a dairy farm with a land value between $5.5 million and $6 million would face an annual tax bill of between $27,500 and $30,000. Larger farming operations could face bills of $50,000 or more, depending on the value of their land.

“Farms don’t make money every year, despite the fact that Opportunity might think farmers are rolling in money,” Bowker said. “Farmers have droughts, farmers have massive expenses some years, and farmers have to ride out the good and the bad.”

He said a tax based on land value rather than profit could create a serious mismatch between the amount owed and the money a farm generated in a difficult season.

“This will drive many of our food producers to the wall,” Bowker said.

“For a country relying on exports driven by food production, it amounts to economic suicide. Our exporters are our key breadwinner for our country. They are our food producers. That’s what’s keeping New Zealand broadly afloat.”

“This is going to hammer our exporters and our food producers, not to mention homeowners.”

Bowker also raised concerns about the cost of the proposed Citizen’s Income. He said providing about $19,400 a year to approximately 4.1 million adults would have a gross annual cost approaching $80 billion.

New Zealand currently spends about $50 billion a year on welfare payments, including New Zealand Superannuation.

Bowker said even if much of the existing welfare system was replaced, the scale of the new payment would require significant funding.

“The scale of this lolly scramble is enormous,” he said. He also questioned what effect a guaranteed income could have on workforce participation, ambition and productivity.

“If every adult receives a guaranteed income regardless of whether they work, study or contribute economically, what impact would that have on workforce participation, ambition and productivity?”

Bowker said the Citizen’s Income and land tax needed to be examined as a major redistribution of income and wealth rather than a minor adjustment to the existing system.

“The money is literally taken from landowners and given to every citizen,” he said. “The debate is therefore not only about efficiency, but about the appropriate role of government in redistributing resources.”

Bowker said no other OECD country operated a nationwide land value tax combined with a universal adult income on the scale being proposed.

“It is not a minor adjustment to existing systems but a structural redesign of taxation and welfare.” Bowker also criticised media coverage of the Opportunity Party, saying too much attention had been placed on its polling, leadership and political narrative rather than the practical consequences of its policies.

“Why has so much focus been placed on Opportunity’s rise, its leader and its political narrative, while there has been limited examination of the practical impacts of its proposed reforms?”

Bowker said voters deserved detailed analysis of the fiscal cost, distributional effects, behavioural incentives and implementation risks.

“The discussion around Opportunity should move beyond personalities, polling and political branding,” he said.

“In my view, Opportunity’s Tax Reset represents a significant and high risk policy experiment.” “That is the debate that deserves far more rigorous and transparent attention from our media.”

The Opportunity Party has not responded to repeated requests for a interview.