Bill English MP
National Party Finance Spokesman

23 February 2007

Report sinks Labour's new tax idea

"Labour should target interest rates by pulling back from its large scale spend-up rather than wasting any more time on the fatally flawed mortgage tax," says National Party Finance spokesman Bill English.

"The Treasury report on the tax, released late this afternoon, makes it plain that Labour is embarrassed by the mortgage tax and cut short the official investigation.

"But it was patently obvious that the mortgage tax was a dopey idea and little more than an attempt by Labour to shift responsibility for its high taxing big spending policies.

"The Reserve Bank has stated clearly that the Government's spending plans are expansionary and putting extra pressure on inflation.

"Labour's $5 billion spending surge up to the next election will keep interest rates higher for longer.

"Now the report has finally killed off the mortgage tax, Dr Cullen should explain why households and businesses should pay higher interest rates so he and Helen Clark can keep spending like there's no tomorrow right through to the next election."

Mr English believes Treasury and Reserve Bank officials have always been unconvinced by Dr Cullen's idea of a mortgage tax and this report shows why.

"There would be any number of ways of getting around such a tax. In officialese, the paper says, 'there is plenty of precedent for specific targeted measures failing to be fully effective because of the innovative responses of affected parties'."

Mr English says the report shows the mortgage tax could add up to 2.5% onto every mortgage rate in the country.

ENDS

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