2. SHANE JONES (Labour) Link to this
to the Minister of Finance
Has he received any reports of support being expressed by the Governor of the Reserve Bank for the introduction of capital gains tax on housing?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
I have seen a number of reports from the Governor of the Reserve Bank recommending a capital gains tax as an appropriate response to New Zealanders’ “obsession with property”, and a useful measure to “take the steam out of the property market”. I should of course make it clear, in all fairness, that those statements were made not by the current governor but by his predecessor, who is now the leader of the National Party.
Hon Dr MICHAEL CULLEN Link to this
No. We take very little advice from the former Governor of the Reserve Bank who is now the leader of the National Party. I have asked for a report from Treasury and the Reserve Bank on possible instruments the bank could use to underpin the effectiveness of the interest rate mechanism. The terms of reference exclude consideration of such a tax. Of course, only one politician of note in the House has argued for such a tax, and that is Dr Brash.
John KeyCan the Minister confirm that, far from ruling out the introduction of a capital gains tax, last week’s terms of reference outlined by the Reserve Bank and Treasury simply delayed it “beyond the scope of the present review”; if this is the case, will he once and for all get up in the House and confirm that he does not intend to put in place a capital gains tax on property?
Hon Dr MICHAEL CULLEN Link to this
I can confirm it again, but Treasury and the Reserve Bank are independent bodies, and no doubt they foresee the possibility that at some stage in the long distant future, when Dr Brash is in his 80s, they may have to carry out a review at his request.
Why, having preached that New Zealanders should buy shares, and having lamented that they have far too much invested in property and not enough invested in shares, is he now proposing to apply a capital gains tax on New Zealanders who own foreign-domiciled shares, including most of the banks that operate in New Zealand and many of the utilities?
Hon Dr MICHAEL CULLEN Link to this
What I have said in the past, and I think it is one area where Dr Brash actually agrees with me, is that too high a proportion of our savings is in housing, not because we have a love affair with housing—I do not agree with that—but because we do not save enough to save in anything else but our housing.