Don’t be Xenophobic, Make Money Out of the Foreigners

Gareth MorganEnvironment, Tax and Welfare

Our blog on Taxing the Mega-Rich for their Kiwi Hideaways galvanised two reactions from readers – one xenophobic a la the Winston Peters followers, and one enlightened. The enlightened folk recognise that foreign investment, tourism and immigration can all be hugely beneficial to New Zealanders if we’re smart enough to take advantage of the opportunities (i.e. by taxing them). Winston’s lot would rather close the shutters, hide away in their little corner of the world, and watch the world go by while they’re atrophying.

Instead of turning foreigners away, milk them

As discussed in that blog, foreign ownership of land should result in tax revenue from the foreign landowners, so long as we had an income tax regime without loopholes. As long as they are paying their share, there should be no problem with them owning their slice of paradise, just as we welcome foreign investment in businesses that contribute to the tax take. But let’s extend the argument to some of the other interactions foreigners have with our economy and assess what other revenue we can garner from that – at least to cover the costs we incur, if not make a profit.

Sting them for insurance costs

Tourists visit to enjoy our national parks and use our highways and accommodation facilities. They also cause more than their share of road accidents, and trigger expensive rescue operations in our mountains. The cost of all these should at least be recovered – as is common overseas – rather than ACC and other taxpayer-funded agencies bearing the cost. Where they are not, it is nothing less than a taxpayer subsidy of our private sector who do make profit from these visitors. The method is easy – make them buy insurance at the airport.

And entry fees

But we could and should go even further. This season the Great Walks are enjoying record numbers of tourists. Again these are taxpayer-funded facilities so why shouldn’t the taxpayer get a direct return on that investment, at least to cover the track maintenance? We already charge for hut beds so clearly are not allergic to the user-pays ethos, but extending this to foreigners having the right to use of National Parks again seems a no-brainer. Again that levy could be collected at the airport as part of a bundled “taxpayer-provided services levy”.

And it shouldn’t stop here. In instances where there are direct charges for the services provided by central- or local-government funded or part-funded amenities, we could simply have a separate and higher charge for foreigners. Zoos for example could levy that – as the example in the photo illustrates at Darjeeling zoo, foreigners pay 2.5 the entrance fee that locals do.

We already do this at the Waitangi Treaty Grounds, presumably because there is value in New Zealanders visiting this historical site. Why not extend this approach to other sites – such as Te Papa, Zealandia, and the plethora of other Zoos and Museums that receive taxpayer and ratepayer subsidies?

Transition to a clean and clever economy

If New Zealand is going transition from dumb and dirty economic growth (wherein the extractive industries are subsidised by being able to pollute with impunity) to clean and clever growth (where industries that do not do this no longer as taxpayers, have to subsidise those that do) – then we have to get smart about our interface with the world economy.

There is enormous scope to make New Zealand a more and more attractive destination for tourists and especially, immigrants. This is the whole rationale for me putting my support behind Predator Free New Zealand – because it will make our country a place talented people want to visit and live. But the investments in our environment need to get the return that validates such a strategy. And that means ending the subsidies to dumb and dirty as well as ensuring it’s not just the taxpayers who are funding environmental improvement.


Don’t be Xenophobic, Make Money Out of the Foreigners was last modified: December 15th, 2015 by Gareth Morgan
About the Author

Gareth Morgan

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Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. He is also a motorcycle adventurer and philanthropist. Gareth and his wife Joanne have a charitable foundation, the Morgan Foundation, which has three main stands of philanthropic endeavour – public interest research, conservation and social investment.