11 Sep 2009

Groups against property speculation tax

7:27 pm on 11 September 2009

The Business Round Table and the Property Investors Federation say a tax on property speculation will not help the New Zealand economy recover.

Reserve Bank Governor Alan Bollard supports such a tax, saying it could enourage New Zealanders to invest in areas other than housing by neutralising tax advantages.

The Property Investors Federation says introducing the tax will not generate a great deal of income. President Martin Evans says the sector is already self-regulated by the demand for rental properties.

Business Roundtable executive director Roger Kerr says the tax will not be enough to persuade people to invest in business rather than housing.

Dr Bollard says a tax on some investment properties could put them on a more equal footing with other types of investments.

Dr Bollard has warned the economy's fragile recovery is at risk if people again pile up debt to buy houses.

He told Morning Report the bank favours a mechanism to neutralise the tax advantage for investment in property when compared with other forms of investment.

One suggestion is a tax on properties sold within a certain number of years. Dr Bollard says the Reserve Bank is not suggesting any such tax would affect owner-occupier housing.

He says he wants New Zealanders not to consider housing investment to be a one way bet and to also consider investing in businesses or the share market.