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CGT makes it harder for first home buyers & renters

Amy Adams - Finance

26 February 2019

The Capital Gains Tax will make it harder for first home buyers, driving up rents and making it more difficult to save, National’s Finance spokesperson Amy Adams says.

“The Government’s Tax Working Group concluded that a CGT won’t help with housing affordability or high house prices and was likely to result in higher rents. That’s a fail for one of the Government’s prime objectives in setting up the group.

“As well as seeing rents rise, which makes it harder to save for a deposit, many young New Zealanders take in boarders or flatmates to help with mortgage costs. Under the proposed regime, they’d be hit with capital gains tax if the flatmates are using more than half the property.

“Bringing in one of the most onerous capital tax systems in the world will do nothing to alleviate our housing shortage and will discourage New Zealanders from investing and saving.

“Instead it raises rents and shrinks the rental market as well as encouraging Kiwis to pull their money out of investments or assets that attract tax and put it into the family home, or offshore investments. It will encourage behaviour that does nothing to boost housing supply, productivity or retirement savings.

“New Zealand is worse off if our tax regime encourages people to invest more in their own home, building a ‘mansion’ instead of investing in a rental property or a business. It does nothing for the economy or productivity and it doesn’t create more fairness.

“The Tax Working Group got advice on links between tax and the housing market and its final report is clear – tax has very little to do with housing affordability or high house prices but it may result in an increase in rents.

“National will fight the Government’s proposed tax grab every step of the way. We will repeal a Capital Gains Tax and we will not introduce any new taxes in our first term. National believes New Zealanders should keep more of what they earn and don’t need ever more ways to be parted from their hard-earned dollars.”

ends

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