Let's talk capital gains - BNZ head

  • 14/10/2017

The head of one of New Zealand's largest banks says it's time to consider a capital gains tax - but it has nothing to do with house prices.

Both the Labour and National parties this election ruled out introducing a CGT - which taxes the profits made on selling assets such as houses.

But Bank of New Zealand chief executive Anthony Healy says as a matter of equity, the tax needs to be considered.

"We certainly have a tax system that taxes them on the income that they earn, and that's important," he told The Nation.

"But when it comes to the value of assets, and that's a big part of people's wealth, we don't have a tax system that works."

But he said his position had nothing to do with housing affordability.

"All the evidence points to the fact that having a capital gains tax doesn't address housing affordability," he said.

"If you look at, say, Australia, for example, they have capital gains tax, and they still have housing affordability issues. It's really about equity in the tax system."

The current system pushed people into investing in property, rather than more productive sectors of the economy, he said.

"If you were to apply a capital gains tax where you see a lot of wealth accumulation as opposed to income, then you have room to move, and you can look at the lower income tax rate, particularly for those who are struggling to make ends meet."

New Zealand is one of a few developed countries without a broad capital gains tax system and some economists have for years been calling for it to be considered.

In 2015, the Government tightened the rules around selling homes, effectively enforcing a capital gains tax on residential properties sold within two years of purchase, but exempting the family home.

NZN