9. METIRIA TUREI (Co-Leader—Green) Link to this
to the Minister of Finance
Does he stand by his statement that “We want a tax system that tilts the economy towards work, investment and savings and away from the unsustainable borrowing, consumption and over investment in housing of the past decade”?
Hon BILL ENGLISH (Minister of Finance) Link to this
Yes, and the tax package announced in the Budget this year and implemented on 1 October and 1 April next year will go some way in that direction.
Why, then, did the Minister ignore Treasury’s advice and not bring in a capital gains tax on property excluding the family home, which would have helped to reduce housing speculation?
I know that the Green Party has advocated for a capital gains tax for some time. The Government decided not to proceed with one, for a couple of reasons. One was the complexity of such a tax. The second was that it would take quite a long time to generate significant revenue compared with the other measures available from the Tax Working Group. Nor did we want to cause too much disruption at a time when many New Zealanders were concerned about their house values and their job security.
Why will he not actually do something about both the medium and the long-term effects of unsustainable borrowing to fund housing speculation, and take Treasury’s advice, and the Green Party’s advice in the Mind the Gap package, that a capital gains tax excluding the family home is a critical step towards tilting the economy to meet his intentions?
I can only give the same answer as I did before. The Government has looked at the option seriously, because it is a serious proposition. A number of countries have capital gains taxes of some sort. We decided in the circumstances earlier this year not to take that option. However, we did increase the effective tax rate on investment housing by abolishing allowances for depreciation.