National says no to capital gains tax

A capital gains tax on property investment is definitely not on the Government's agenda, says Housing Minister Phil Heatley.

Friday, June 5th 2009, 11:07AM

by Vicki Holder

Responding to a call for debate on the issue by Treasury Secretary John Whitehead this week in a speech to the Institute of Directors, Heatley said, "Treasury can have their fun. But, as we have said before, we won't be introducing a capital gains tax on property."

Whitehead talked about "significant adjustment and change" so the economy can emerge strongly from the current recession.

He focused on taxation, regulation, the role of the public sector and making New Zealand an attractive investment destination.

"At the risk of being chased down by an angry crowd with pitchforks and flaming torches, yes, this should include consideration of moving the boundaries to tax more capital gains - for example on investment property - and shifting more of the tax base towards consumption," he said.

Capital gains, or property taxes, he said, would encourage investment into productive activity. "The time to grab these opportunities is now."

Whitehead's timing, one week after the budget had been announced seemed curious. Some have suggested that the Government and Treasury were trying to rally support for the idea of a capital gains tax but Heatley denied the implication.

"They bring it up once every 12 months or so. The Finance Minister Bill English has gone out today and publicly stated that it's not on."

However, the Alliance Party came out and said that it agrees with "its traditional enemy" Treasury on this one tax issue - "a capital gains tax on property investments is needed".

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