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Westpac not smarter than IMF:CGT will worsen affordability

Media release from the Taxpayers' Union

MEDIA RELEASE

Westpac not smarter than IMF: capital gains tax will worsen housing affordability


FEBRUARY 25 2019
FOR IMMEDIATE RELEASE

In contrast to the claims by Westpac’s Chief Economist, the World Bank is right: capital gains taxes that exclude the family-home will encourage gold-plating of the housing market and drive up property prices, says the New Zealand Taxpayers’ Union.

Taxpayers’ Union Executive Director Jordan Williams says “Westpac Chief Economist Dominick Stephens is wrong when he claims the capital gains tax proposal will improve housing affordability. If you tax every single investment except an individual’s primary residence, the obvious result is over-investment in housing. The housing market will become dominated by large, American-style ‘McMansions’ and first-home buyers will find it even more difficult to get on the property ladder.”

“Mr Stephens’ views that this sort of CGT will reduce the cost of housing aren’t just out of the mainstream, they are totally inconsistent to economic theory and the observations off shore. There is something more going on here.”

“The IMF has found that Australia’s primary residence exemption has encouraged a debt-fueled house price surge. It appears Westpac is cozying up to the Government in making bogus claims the same would happen here.”

“Mr Stephens tries to argue that the current tax system skews in favour of un-productive investment. Why then does he advocate for a new tax which would target shares, small businesses, commercial property, and farms?”

ENDS


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