Tax gains not house purchases

The Herald reports:

Independent economist Shamubeel Eaqub was concerned about New Zealand's ranking. “We've got a system with a very light touch when it comes to property, whether it's capital gains tax or stamp duty,” Eaqub said.

“It would be a very good thing for New Zealand to tax property purchases because we can ring-fence that tax income. It wouldn't be just a revenue grab but would be used to make houses more affordable and increase the supply of housing.”

It would be a very bad thing. A tax on purchases would make houses more expensive just as makes goods and services more expensive.

And using the extra revenue to increase just reduces growth.

I'm all for introducing a comprehensive Capital Gains Tax, but it should be revenue neutral – so income and company taxes should reduce to compensate.

New taxes to increase the size of Government are the wrong answer.

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