CGT no panacea for housing

The Herald reports:

Labour and the Green Party have conceded that a capital gains tax would not be a “panacea” for New Zealand’s unaffordable housing crisis.

The two parties seemed initially flummoxed when a questioner at an otherwise friendly election forum organised by the Public Health Association in Auckland this morning noted that having capital gains taxes had not stopped housing price booms in Australia, the US and Britain.

“I don’t know why they haven’t worked in those countries,” said Green health spokesman Kevin Hague.

I do. It is because the artificial restrictions on supply of land are the major factor in house price increases.

National North Shore MP Maggie Barry said Labour proposed so many exemptions in its capital gains tax that it would be ineffective.

“Perhaps that’s why it’s been ineffective in other countries,” she said.

I support NZ having a Capital Gains Tax, but it must be with no exemptions, and more importantly income and company tax rates should be lowered to compensate families and businesses – so the overall level of taxation remains the same.

David Cunliffe has said that their Capital Gains Tax will see NZ families and businesses paying $4 to $5 billion a year more in taxation. That is why they are doing it.