Smith ‘The Destroyer’ Challenged Over Token Subsidy
New Zealand First says a simple 23-word amendment to the Income Tax Act 2007 is all is needed to supercharge the earthquake strengthening of buildings.
“Minister for Building and Construction Nick Smith seriously risks becoming known as Smith ‘The Destroyer,’ given he wants to demolish historic buildings that he rules are earthquake prone,” says New Zealand First Leader and Member of Parliament for Northland Rt Hon Winston Peters.
“This token bribe to save some facades in Wellington is an appalling band-aid gesture. At a maximum of $35,000 per building and limited to $3m, it isn’t going to go particularly far, particularly fast.
“While Smith ‘The Destroyer’ has historic buildings in his sights, why did modern buildings come through the earthquakes with far less than flying colours?
“This is why New Zealand First Deputy Leader, Ron Mark, has an amendment to the Income Tax Act that doesn’t need subsidies. All that is needed is a 23-word tweak to that Act to make earthquake strengthening tax deductible, just like earthquake repairs are.
“Just like with speed cameras, this government has to show New Zealanders that it’s more than about revenue, in this case the tax they’ll get from forcing earthquake strengthening,” says Mr Peters.
New Zealand First’s (Ron Mark MP) proposed amendment to Income Tax Act 2007
(1) In section DA 2(1), after “capital nature”, insert “, unless they are seismic works where an EPB [Earthquake-Prone Building] notice has been issued for the building undersection 133AK of the Building Act 2004”
This amendment redresses significant tax disadvantages faced by commercial, industrial, retail, and heritage property owners when looking to bring buildings above the earthquake-prone building threshold required by this Bill. Major chartered accountants (like KPMG and others), property owners, and even Local Government New Zealand have been outspoken in their belief that Inland Revenue is inconsistently treating the tax deductibility of business costs by considering seismic works to be a capital expense for tax purposes. As the Property Council of New Zealand noted in its April 2014 submission: “The expenditure required to remedy this will not increase the value of the building, on the basis that earthquake strengthening will not qualitatively change the function of the building (i.e. will generally not result in a higher rental stream)… In short, expenditure on earthquake strengthening is largely made to mitigate a loss in economic value, not enhance to the value of a building”. Without this consequential amendment, many buildings may be demolished without replacement, creating a blight in areas of lower capital value.