Rentals not undertaxed
In the Friday, 29 March Herald, Dominick Stephens said "property is more lightly taxed than other forms of investment". He quoted a Treasury and Inland Revenue report to back up his claim.
That report was also used by the Tax Working Group. However economist Bevan Wallace found serious errors in the report and showed that the conclusion that rental property is undertaxed was wrong.
To their credit, the TWG accepted that there was an error in the report and agreed that rental property was not undertaxed compared to other forms of investment.
The TWG have said that a comprehensive CGT would not affect house prices, but it would increase rental prices. We already have a rental property crisis in NZ. Tenants do not want their situation made worse.
Rental property owners are ordinary New Zealanders providing for their retirement. They provide accommodation to a third of New Zealanders which is an incredibly important part of our productive economy. They pay tax on over $1.5 billion dollars of rental income each year.
If a CGT is introduced it shouldn't apply to some assets and not others. Excluding the family home is already creating a distortion. Applying a CGT just on rental property would be more than unfair, it would be unprincipled and unjust