Thoughts on Capital Gains tax

My submission to the Tax Working Group in terms of capital gains tax.

  1. Basically I think it will make capital stickier. If you own an investment but after time think that a better investment ticks your boxes, you will lose money for having to use money as a medium to exchange your asset. Many areas in Auckland have changed from mainly a rental area to an owner occupied area. Many of those houses which were sold made way for someone else to own a home. If you are an investor would you hesitate to sell if you knew you would have less money to shop for the next one.
  2. A capital gains tax means that the government then has a vested interest in house prices going up. How would future government policies be treated if they posed a stable or diminishing volume of sales or prices.
  3. Should we punish those NZer’s trying to seek shelter from inflation.

At the end of the day house prices have more to do with money supply than taxes. How many countries that have a capital gains tax have had huge asset price growth? Australia, England and US are some examples of countries with a capital gains tax.