John Key MP
National Party Finance Spokesman
31 July 2006

Capital gains tax will not increase affordability

A capital gains tax on all property except the family home won’t help make housing more affordable, says National’s Finance spokesman, John Key.

“The Greens have argued that a capital gains tax would make houses more affordable, but it is a delusion.

“Such a tax has not made housing more affordable in countries that have introduced it, such as Australia. Nor has it done anything to alter the normal cycles of the housing market in those countries.

“National opposes a capital gains tax on property. It will add to the cost of capital, and therefore drive up the cost of rents. And internationally, house prices have been rising in countries whether they have a capital gains tax or not.

“A significant driver of the cost of housing in New Zealand cities is because of the lack of land for new developments – something that is driven by the expensive hoops developers have to jump through under the Resource Management Act.

“The Building Act has also imposed much higher costs on developers and builders.

“If the Government started addressing those issues then that would ease some of the pressure on housing supply, and therefore the price.

“If the Government is committed to seeing more New Zealanders own their own homes, they need to address these issues, not slap yet another tax on New Zealanders.”

ENDS

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