The UK has capital gains tax - and that did not stop house prices from going up. I could barely afford a flat in the UK - where as in NZ I can afford a house. Placing yet another tax - especially at this time - will not fix the problem.

This has to be done if John Key is serious about his productivity targets. Give everyone a long notice period and watch the investment move out of housing and into business. People do not have to lose their shirt over it. It is a no brainer.

The financial & economic woes that are evident internationally at present have no link to taxation issues ... rather it is the greed of corporate governance, and these clowns at the Manufacturers & exporters association have the audacity to expect the investing punters to risk losing more of their shirts supporting their folly. Get real kiddies

A capital gains tax if capital values inflation adjusted will bring not much into the kitty. The inflation in effect robbilg savares as value of money depreciates.
To start with, the businesses should pay managers of businesses/directors, minimum salories, and performance fee which much lower than their present salory. No golden parachutes. If not taking the post, simply lower management given chance to take tose places vacated by fretting (created ex)directors.

Simon your comment is so very very true, well put.

The ability of so called property investors to use an LAQC structure to move so called losses from a company to offset a shareholders personal tax is another significant distortion in the treatment of income.

The ability to depreciate a rental dwelling and claim as an expense is another.

Finally when individuals are encouraged by poor tax legislation to buy and sell an asset (I use that term very loosely) to other individuals rather than invest in producing some product that is desired by our trading partners we will suffer from over priced housing.

The Government have to put in place a structure that encourages and allows the free market to deliver the desired outcome.

Can anyone answer this.

John Key we need you to remove this ridiculous bias towards housing as it depletes capital for the productive economy and has our population focused on passive asset investment rather than investing in capability to compete with the world. I am sure Mark Weldon and David Skilling will be happy to expand on the benefits of removing this tax bias, the need to build capital markets and invest in our best and brightest people and ideas. I can assure the earlier post that John Walley and many of us advocating CGT are not devoid of a capital base so the “envy tax” throw away line is just a nice way of avoiding the real issues here.

John we need politicians that act in the best interests of the country. Peter Dunes comments yesterday that introducing CGT on secondary housing would be political suicide may well be true but a leader would do the right thing anyway. Yes 200,000 New Zealanders won't be overly happy but you will have sent a message to New Zealanders that you are serious about driving positive change that benefits ALL New Zealanders not just a few at the expense of many.

For the property investors reading this post, it's not about you or me or our respective investments it’s about what's good for the country and specifically the need to build an economy that has jobs for our kids. You can buy and sell as many houses as you like and it won’t have created a single sustainable job for your kids. That lack of sustainability is all around us with collapsed finance companies, negative equity, forced sales, jittery banks and some very poor real estate sales people. Our kids are going to ask some hard questions of the baby boomers and I am working to make sure I have a few answers for them.

Se we need real jobs, created by industrious people who do things and make stuff that the world wants (and needs) rather than funding this PYRIMID selling scheme (with tax bias) that does so much damage to our future.

It is (just about) politically possible to implement this much needed tax IF....

1) enough warning is given to investors, phase it in over 5 years
2) ma and pa have an exemption on the house they live in
3) It is not backdated

Unfortunately under MMP, even with the caveats above it will still be extremely difficult to get this legislation through the house.

Selwyn, your comments are absurd. Tradepeople are in "real" jobs, creating housing for people is a "real" activity meeting a "real" need.

I agree that we need to grow the export sector - but focus on that... don't focus on destroying the industry of others.

So how can they encourage exports? Government can stop throwing barriers in our way (everything from trade barriers to regulation - OSH, RMA, etc); they can provide efficient infrastructure (from roads to broadband); they can lower taxes so there is an incentive to generate profits (by reforming the welfare system to be one that encourages work not dependency, by reducing the size of government and increaing productivity); they can make employment law more flexible; they can tell the radical activitist in their community that there are more important things in life than listening to their extreme views; and they can encourage an environment were the accumulation of wealth is a matter of pride not shame.

These are all positive initiatives that when used in concert would have positive effects. A capital gains tax will simply drive initiative away.

Initiaive operating in a free market will deal with housing affordability (eg flexability of housing design). My reading of the survey that inspired this debate is that they see less government regulation as the answer (eg Houston) - not a capital gains tax.

The only tradespeople who would be hurt are the ones that are currently doging the tax system as it is.

Less expensive houses will give a little more money to pay for improvements!

The reasons for poor Aussie affordability could be to do with tax loopholes similar to the LAQC we have here. Anyone know anything about Aussie?

I believe it is the intention on which the property is purchased that is important, which as correctly stated above is NZ law (although not enforced correctly) if capital gains tax were applicable to all properties, those of you in or nearing retirement would be liable for around 30% tax on any increase in your homes value since it was purchased. As with many NZ'ers who purchased homes 20-30years prior this sum could relate to an easy $100000 payable to the govt. With the looming shortage in super this would have ever greater ramifications! Investment in housing supplies much needed accomadation to NZ'ers who are unable (ie. bad credit) or unwilling to finance themselves. perhaps the rules should be tighter regarding "property traders", which could include a compulsory CGT for property held under a certain time frame unless sufficient evidence was supplied which meet a criteria for exemption (ie. made redundant had to move regions to take up further employment). I am firm believer as that, as mentioned above, priority should be given to reforming our abused welfare system! including drug testing plus compulsory work on community and council projects. If the key drivers which effect property supply and demand are present, CGT will not stop prices increasing further, nor it will not stop investors or traders. And by the way good luck to any political party that tries to implement such a scheme... it may be a wise choice but it will be their last!

I believe introducing a Capital Gains Tax will benefit NZ immensly.

I work in accounting and too often I have seen clients with rental properties - almost deliberately making a loss to offset their tax (and most gain refunds), claim GST and gain GST Refunds and then a few years down the line, sell the property for $60,000 more than they bought it for - gain the capital - and not be taxed on it! These people are bleeding the money that the average wage earner pays for I might add from the government and all the average tax payer gets in return is rises in rental costs and house prices.

Another client - a farmer - bought his huge farm for $400,000 20 years ago - over the last 8 of those years he has received over $300,000 back in GST Refunds alone - not including his end-of-year tax refunds! That would almost cover the cost of the farm to begin with! Three months ago he sold the same farm for $2.2million dollars! Of that capital gain he paid nothing in tax - not a cent! How can the government allow individuals and companies to make these losses - claim huge amounts of tax payers money in refunds and not sting them for anything even when enormous
Myself and my partner are currently trying to buy a property yet w capital gains are made (in this case $1.6million!!!!)

With the house prices so much higher than what an average wage earner earns this is impossible! To even begin you need an obscene amount of money to put down as a deposit!

NZ's problem is too fewer individuals owning too many properties. Our present landlord owns 3 rental houses as well as his own home - in NZ this isn't a huge amount of rentals, we know others who own 20 rental properties and I ask you how is this fair when 1st-time buyers cannot even get onto the property ladder to begin with!!!!!

I believe that a Capital Gains Tax will at least reduce the amount of properties that one individual can own hence lowering the cost of renting (and living!) and hopefully house prices will follow. The decrease in rentals and the simple fact that they will be taxed on any capital gain may discourage businesses from deliberately making losses and so increase productivity - increase the minimum wage - increase jobs!!

Come on Mr Key - you promised change so deliver change!