Time to eliminate investment distortions

Time to eliminate investment distortions, says Productive Economy Council

"The furore over Minister's second homes once again raises the question of the lack of Capital Gains Tax incentivising property speculation, distorting our investment regime and depriving our productive sector of the financial oxygen it needs to grow", says John Blackham, of the Productive Economy Council.

"If the income from property speculation, be it by Ministers of the Crown or private citizens, were taxed in line with what Joe average Kiwi citizen contributes through his weekly wage packet, then New Zealand would stand a better chance of competing with the rest of the developed world."

Selwyn Pellett spokesperson for the Productive Economy Council added, "MPs have regularly said that to introduce Capital Gains Tax is political suicide. The PEC asks why? Given that there are around 200,000 people in New Zealand that own investment properties or second homes and that they have just one vote each the numbers don't really add up to political suicide. However the number of people subsidizing the investment policies of those few, via a larger tax burden on their PAYE is far greater. The net effect of this taxation distortion is artificial asset inflation, one that reduces productive investment and job creation, increases the national debt and creates one of the lowest levels of housing affordability in the western world."

"It is unfortunate", adds Pellett, "that Government Ministers are put into a position of potential conflict of interest, whereby introducing Capital Gains Tax is against their own self interest".

We are confident John Key will deal with the issue and tidy up practices of state services. We believe that financial disclosure at the level of directors of publically listed companies, including beneficial trusts, is part of the remedy" says Pellett. The public has a right to know how MPs financial interests may affect their decisions on policy, and either have them take no part in those decisions if there is a conflict of interest, or remove the conflict of interest first as would happen in any board level conflict around the country."

ENDS

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