Trans Tasman makes a pertinent observation:
OK, so the Govt wants us to smoke more, which is why it has hiked the tax on tobacco, right? And the whole Kyoto, putting a price on emissions thing: it’s to encourage people to put out more greenhouse gases, isn’t it?
No?
Well consider the position of Labour and the Greens and – as of this week – whoever writes NZ Herald editorials. Apparently, according to this logic, the way to get more houses is to tax them more. Confused? They are. . .
. . .You don’t – unless your grasp of economic incentives is really skew-whiff – increase the tax on something you want more of.
There might be valid reasons for a capital gains tax – though I’m not convinced the negatives outweigh the positives.
But whoever thinks it will increase the supply of houses needs to think again. It won’t.
Tony Alexander (BNZ) has some good comments about the fallacy of CGT in his latest Weekly Overview… HIs final comment..
“The restraints on New Zealand’s rate of income per capita growth lie outside the institutional and tax framework and the causes of high house prices lie well away from the tax treatment of capital gains.”