Press release - Capital Gains Tax misses the point

17-Apr-2015

FOR IMMEDIATE RELEASE 

Capital Gains Tax misses the point 
Auckland, New Zealand - 17th May 2015 - The Reserve Bank’s call for ‘fresh consideration’ on tax policy for properties misses the point in addressing the current Auckland housing imbalance.

In a speech by the Deputy Governor Grant Spencer that was tantamount to a call for there to be a capital gains tax, the Reserve Bank points to property investors as a key driver of the Auckland house-price inflation.  However, the ensuing reignited rhetoric on capital gains tax falls short of addressing the underlying cause of the current housing pressure.

“Capital gains tax is a Band-Aid solution that cannot solve the challenges we face in this market,” says Andrew Bruce, President of the Auckland Property Investors’ Association, “Auckland’s Achilles heel has always been a historical undersupply of housing.  The persistent price-climb and the inevitable sidelining of first-home-buyers that is repugnant to so many Kiwis are the direct consequences of this shortage.  Singling out the ‘tax-preferred status of housing’ is a political cop-out that dodges the real underlying issue.”

From a policy standpoint, Bruce believes decision-makers can make a big difference by making Auckland a more development-friendly regime.  “We have to address the heart of the issue - that of supply, or lack thereof.  Until policies are in place to promote the supply side of the equation by welcoming the building industry back into this city to boost its housing stock, I do not see there being any substantive solution towards easing the housing pressure.”  

Bruce is also wary of the unintended consequences a capital gains tax may bring to renters and first-home-buyers.  “Property investors being businessmen and -women will factor all costs into their revenue, being that of either sale price or rent,” says Bruce, “My concern is that a capital gains tax will ultimately be detrimental to renters and first-home-buyers who are the end-users of the accommodation goods and services investors bring to this market.  Ironically, these are the people the capital gains tax proponents set out to protect in the first place.” 

The Auckland Property Investors’ Association is a non-profit organisation that supports local investors through industry advocacy and volunteer-driven education programmes.  


Contact: 
Madhu Narsai
Auckland Property Investors’ Association
media@apia.org.nz
19 Mackelvie Street 
Grey Lynn 
Auckland
Ph: +64 9 360 2376


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