The Government was told in 2011 by its own Savings Working Group that property investment enjoyed unfair tax advantages over savings, but National has consistently ignored the advice and the housing crisis it has fuelled, the Green Party said today.
A new book, Tax and Fairness, out this month says an unfair tax system works in favour of property investors over everyday savers and KiwiSavers.
“It’s good that Steven Joyce today recognised the need to tax income fairly but his Government has failed to do anything about it for nine years,” said Green Party Co-leader James Shaw.
“Budget 2017 should be about closing the tax loopholes enjoyed by property speculators by implementing a tax on capital gains — one which excludes the family home.
“But nine years in and National are unlikely to suddenly decide to make our tax system fairer and our economy more resilient.
“National’s own Savings Working Group recommended in 2011 that the Government should address the unfair tax advantages enjoyed by property investors and incentivise private savings by creating a single low-cost default KiwiSaver scheme.
“They warned that New Zealand has ‘inadequate national saving and an overdependence on foreign borrowing meaning… too much money has ended up in inflated house and farm prices and led to an overvalued exchange rate hurting exports.’
“Substantial differences in effective tax rates favouring housing over savings products like term deposits and KiwiSaver have a big impact on saving and investment behaviour,” said Mr Shaw.
“The Green Party will introduce a comprehensive capital gains tax (excluding the family home) and deliver a single low-cost default KiwiSaver scheme to drive down costs in the industry and increase people’s nest eggs when they retire.
“Incentivising private savings will add genuine resilience to New Zealand’s economy. Greater savings will help lower the cost of capital for businesses to invest and lower interest rates here at home will take pressure off our overvalued exchange rate, helping exports,” said Mr Shaw.