-
Watch Video
The Finance Minister has given his strongest hint yet of a clampdown on tax breaks that have encouraged tens of thousands of New Zealanders to buy a second home.
It came in an interview Bill English gave TVNZ Political Editor Guyon Espiner on TVNZ 7.
"We will seriously consider changes in the taxation of property. We haven't had those put to us yet but I think the evidence that investment patterns in New Zealand could be more productive I think is pretty strong," English says.
Those patterns are perhaps not surprising when you look at the tax breaks available to people who buy investment properties.
If your income was $100,000 and you lost $20,000 on your investment properties, you could offset that loss against your tax bill. So you might pay tax on just $80,000, $7,600 less than if you had been taxed on your full income.
While those rules could be tightened up, the government will not be taxing any profit made from selling the family home.
"The government has ruled out capital gains taxes on domestic property, on your own home. It hasn't really ruled out anything else," says English.
Both Labour and the Greens are encouraged by the Finance Minister's language.
"I thought it was interesting that he left the door open in terms of changes to the tax treatment of investment housing," says Russel Norman, Greens co-leader.
"We've had a major problem with the housing asset bubble which has been one of the key drivers of the Reserve Bank pushing up interest rates."
Labour finance spokesman David Cunliffe concurs.
"I think there is general agreement of the nature of the problem which is we have to get off the boom-bust roller coaster and we have to all invest in things that will help us earn more and export more and save more," he says.
Guyon Espiner says there is general agreement on the problem perhaps, but tax is always controversial.
"So don't count on a solution being quite so cosy," he says.
