Government finally beginning to see sense on capital gains

The Green Party is congratulating the Government for beginning to see sense on a capital gains tax, but is warning that limiting it to properties sold within two years of purchase doesn’t go far enough.

“This is a welcome U-turn from the Government. Only last week they were saying that capital gains taxes don’t work, so it is great they have changed their mind so quickly,” said Green Party Co-leader Metiria Turei.

“The Green Party has been putting pressure on the Government to tax capital gains and recognise the importance of addressing offshore property speculation for years, so we’re glad that John Key has bowed to this pressure even though his solutions are still incomplete.

“The Government’s shift shows their arm has finally been twisted far enough to do something meaningful about the Auckland housing crisis. But it is a half-hearted move that still largely protects property investors.

“A capital gains tax on all investment properties would help direct investment into the productive economy, helping Kiwi businesses grow and create jobs.

“It isn’t fair that a low paid worker pays tax on all their income while property investors who sell their properties after more than two years will still not pay tax on that income they make.

“The Green Party has advocated for a capital gains tax, excluding the family home, for years. It is a sensible policy that can help to take some heat out of the Auckland housing market. We are pleased National is partially getting behind it.

“Limiting the policy to sales within two years of purchase takes the wind out of the policy’s effectiveness. National may have set up a system of perverse outcomes, like properties being sold after two years and a few days to get around the rules. And in Auckland, during that extra time the property’s value may continue increasing by $1000 a day.

“A full capital gains tax would be more effective and fairer. National’s new policy still protects investors and foreign speculators who hold onto homes for longer, and they still won’t need to pay tax on the profits they make.

“The new rules around offshore investors requiring a local bank account and IRD number are welcomed. We urge the Government to utilise these rules to finally start gathering proper information about the level of offshore purchasing of houses.

“We believe the Government should take further steps to restrict offshore investors’ negative influence on the housing market.”