Norman Russel William: Questions for Oral Answer — Questions to Ministers 
Norman Russel William: Questions for Oral Answer — Questions to Ministers 
[Volume:673;Page:19811] 
5. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
 to the  
Minister of Finance 
: Does he agree with the findings of the Savings Working Group which found that the favourable tax treatment of property investment accounted for about 50 percent of house price increases from 2001 to 2007? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes to some extent we did agree with them. It is likely that it was a contributing factor and that was why we moved to increase the effective tax rate on property investors by reducing depreciation deductions; adjusting the loss attributing qualifying company rules; tightening Working for Families definitions to exclude losses on property investment; reducing the top tax rate which significantly reduces the value of losses they can claim and therefore the tax they can get back; and giving increased funding to the Inland Revenue Department to target property speculators who are avoiding property tax. 
Dr Russel Norman 
: Does he—[ 
Interruption 
] 
Mr SPEAKER 
: I ask both front benches to show some courtesy—[ 
Interruption 
] 
Dr Russel Norman 
: Another supplementary question I think Mr Speaker. 
Mr SPEAKER 
: The House will settle. 
Dr Russel Norman 
: One from each side maybe. 
Mr SPEAKER 
: We will not have any more interjections even though they might be helpful like that one. I say to both front benches that it is unacceptable to continue interjecting. Both front-bench members were doing it in a blatant fashion. 
Dr Russel Norman 
: Does the Minister disagree then with the recommendations from the Savings Working Group Treasury and the OECD which have all found in favour of a capital gains tax— 
Hon David Parker 
: And the IMF. 
Dr Russel Norman 
: —and the IMF—in order to put downward pressure on house prices? 
Hon BILL ENGLISH 
: Yes we did disagree with the recommendations. If we had agreed with them we would have implemented a comprehensive capital gains tax. But I have to say that house prices are flat or falling generally and that will assist with the rebalancing of this economy towards a focus on exports investment and savings and away from excessive property speculation. 
Dr Russel Norman 
: Why does the Minister continue to insist that a capital gains tax would be too complicated when they can manage it in the United States China Denmark Finland France Germany Poland Singapore Sweden Switzerland the UK and Japan and when even the Australians can do it; what is he implying about New Zealand—that it is too complicated for New Zealand? 
Hon David Cunliffe 
: Tell us about Southland. 
Hon BILL ENGLISH 
: Do not tempt me! The Tax Working Group looked at capital gains taxes as they operated in all those jurisdictions and on balance actually decided not to recommend in favour of a capital gains tax. The other significant reason is that actually it does not raise much revenue in the shorter term. As I said even the proposal we have heard could take up to 15 years to raise $700 million worth of revenue and when the market is flat or falling it could possibly raise no revenue at all. 
Dr Russel Norman 
: With reference to the flat housing market does he agree with Fran O’Sullivan who recently said that now is the best time to introduce a capital gains tax—when house values are relatively static—and that “It is quite simply a nonsense to continue to run a system which protects the asset-rich …”? 
Hon BILL ENGLISH 
: Well I think the reason she is advocating that is that for the foreseeable future the readers of the  
New Zealand Herald  
would not be paying any capital gains tax because there is no capital gain. That is a problem for a party that is proposing the tax as a way of paying for other very expensive promises. This tax would raise almost no revenue. They would have to find some other way to pay for several billion dollars worth of promises.