8 March 2007

Overseas investors the main winners from OCR decision

The big winners from the Reserve Bank's decision to raise the Official Cash Rate today will be overseas investors in the New Zealand economy, the Green Party says.

"Overseas banks will make more profit on the money they lend, overseas property investors will take windfall gains out of the New Zealand economy," Co-Leader Jeanette Fitzsimons says.

"The Governor also confirmed, at select committee today, that a significant part of the $1 billion business tax cuts, if they are applied as a flat reduction in the business tax rate, will go to overseas owners.

"Yet under current Government police settings, the Bank had little choice if it was to meet its policy targets.

"The Bank's concern with poor enforcement of the tax rules on investment property could be easily and fairly address by an across the board Capital Gains Tax on all investment property - not including the family home, rather than the present selective confusing rules.

"New Zealand's high levels of household debt, high current account deficit and unaffordable housing costs for first home buyers and the inflationary impacts of these, can not be addressed by monetary policy alone.

The tax system must address all forms of income equally, and our lax rules on foreign ownership must be tightened," Ms Fitzsimons says.

ENDS

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