18-02-2009

English reassures property investors

Property investors who fear the new government may be tempted into raising more tax from them can breathe easy.

Minister of Finance Bill English says no changes to how property is taxed are on the agenda.
There has been a fear the government might aim to raise some much needed extra cash by looking at the ring-fencing of losses from property investments.

The last government looked at the idea - and calculated it would raise between $400-600 million a year in extra revenue if it did so.

English told Parliament’s finance and expenditure select committee the issue is not a priority.
Asked by the Green Party co-leader if he would, amongst other things, use the current economic downturn to change the tax laws in order to prevent another property bubble, English said no.

“I don’t think there will be a housing bubble for some time because I don’t think there will be the credit to fund it.

“And look, I’m sure there will be debate over whether we should have deductibility of interest and all that sort of thing. But at the moment it’s just not our highest priority.”

On the outlook for the housing market, English told MPs it is one of the three areas of risk facing economy (the others being banking stability and export prices).

He is “pretty hopeful” New Zealand will not get into the sort of negative spiral of lower asset prices, higher unemployment, and then the assets held by banks become more of a credit risk.