United Future leader, Hon Peter Dunne, says the house tax idea has generated a lot of needless hype.

He says the idea is just one of a number of thoughts from the Independent Tax Review Panel, and should be treated as such.

"No Government in their right mind is going to introduce what amounts to a capital gains tax on family homes, and the house tax idea should be dismissed accordingly."

"What is of more pressing concern though is that this issue will be used to blunt the edge of the more profound criticisms the Panel is making of our current tax system."

"Its clear messages that our present tax system is punitive, discriminatory, and therefore inefficient and unfair cannot be overlooked."

"Nor can its message that taxes in New Zealand are too high - which is a direct slap in the fact for Labour's tax policy and the Alliance's 'hit the better even more' approach."

"The debate on the future of the tax system is timely, but it also opens up the wider debate of Government spending priorities."

"Tax policy has become distortionary over the years because more and more revenue has had to be squeezed of the system to meet Government spending plans."

"The most fundamental reform we could make to our tax system would be to acknowledge that it is purely a functional mechanism designed to collect the revenue required, not a social engineering tool."

"We need to recognise that Government spending is driven by the amount of revenue able to be raised, not the other way round as at present."

"This is the way New Zealand households operate, and it should be no different for Governments," Mr Dunne says.

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