RBNZ right to suggest tax changes for housing - 15 April

In a speech today, Reserve Bank of New Zealand Deputy Governor Grant Spencer suggested fresh consideration is needed on policy to address the tax-preferred status of housing, particularly for investors. We support this call to correct tax imbalances which push up house prices, fuel financial stability risk and pull investment away from productive investment, say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA President Tom Thomson says, “While the speech makes it clear that increasing the supply of housing is a vital part of the solution, capacity constraints mean new housing can only be built so fast. Working on the demand side through additional tools for the RBNZ and correcting tax imbalances that encourage speculation could have a far more immediate effect in dampening prices and protecting financial stability while supply catches up.”

“The speech described housing as ‘the most tax-preferred form of investment, particularly when it is highly leveraged’ and said there is an increasing presense of investors in the Auckland market. A policy response to address this tax imbalance could also have positive effects on our real economy by making investment in productive business more attractive, fuelling real growth, exports and jobs.”

ENDS

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