A land tax on foreign buyers could push up rents and might not have any impact on Auckland's overheated market, Labour says.
It's the latest twist since Prime Minister John Key floated the possibility on Saturday -- although he doubts it's necessary.
Mr Key says a tax on foreigners who buy houses would be an effective way to curb demand, if new data due to be released in a few weeks shows they're having a significant impact on the market.
It would be charged annually as a percentage of property value.
Labour's housing spokesman, Phil Twyford, says they would simply pass on the tax to tenants.
He wants the Government to explain why that wouldn't happen.
"A land tax could push up rents and risks having no effect on skyrocketing prices," he said.
"It's still highly questionable that land tax of a few percent would deter foreign speculators who last year made capital gains in Auckland of 25 percent."
Mr Twyford says the Government should follow Australia's lead and ban foreigners from buying existing houses, which forces them to build new ones.
Mr Key still believes increasing supply is the best way to relieve the pressure in the Auckland market.
And he isn't worried about ACT leader David Seymour's complaint that a land tax would break an election promise because National campaigned on no new taxes.
Mr Key says if a land tax was introduced, it wouldn't be imposed on New Zealanders.