China has sent the National Party a warning that it's watching its plans for a luxury homes foreign buyers tax.
It comes as the party's forced to keep explaining how its plan doesn't breach international rules and the latest claim from Labour is that Kiwis overseas could also get taxed.
Leader Christopher Luxon was out campaigning in Hawke's Bay on Monday with National Party royalty - farmers.
"I think farmers have been treated as villains in New Zealand over the past six years," he said.
And for the past six days National's been under pressure over its tax policy.
"We had advice from experts and lawyers before [releasing the policy] and we have continued to talk to experts afterwards as well," Luxon said.
They've talked about National's plan to bring back foreign buyers, but only for luxury homes, with a 15 percent tax.
But National didn't get any formal advice on whether that could breach our tax treaties, especially with China, whose citizens could make up a third of the foreign buyers National needs.
"We are absolutely confident in our numbers and also in our proposal," said Luxon.
China is saying, you better be.
The Chinese Ambassador told Newshub, "we are studying the specific details and implications" and "hope the final legislation... is consistent with the agreements signed between China and New Zealand".
Luxon said he wasn't worried about how China may react.
"We are very confident we have done the work," he said.
The clause in our treaty that would let us tax Chinese buyers is a promise to not discriminate on the grounds of nationality, said the National Party's preferred tax expert Robin Oliver.
"As a sovereign country, we can tax anybody how we like," Oliver said.
But Labour has its own preferred tax experts who say if that's the case, some Kiwis could be taxed.
"It's a shambles," said Labour finance spokesperson Grant Robertson.
"This was a dodgy policy from the beginning."
Luxon was confident it would only affect foreign buyers.
But Robertson said if the Nats' argument rests on the non-discrimination clause that means any Kiwi who has lived overseas so long they're a non-tax resident here will have to pay the 15 percent tax too.
Oliver said National could say there is an exemption for New Zealand citizens.
Robertson said National has a big problem with its policy "if the only way they can make it work is by trying to get the other side to agree to a carve-out".
Luxon reckons it's a "good proposal and a good plan".
It's a plan that Luxon will likely spend a lot more time defending.
