Cullen confirms 'status quo' on property

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Finance minister Michael Cullen has reaffirmed that the government has no plans to introduce a new form of property tax.

Tuesday, July 26th 2005, 10:56AM

In a speech to the Wellington Property Investors’ Association (delivered by associate finance minister David Cunliffe) Cullen said the government’s position on the taxation of property “is that the status quo is quite adequate”.

He said the Tax Review 2001 had considered whether capital gains should be taxed on a more comprehensive basis by introducing a separate capital gains tax.

“They concluded that the disadvantages of a comprehensive tax on capital gains – increasing the complexity and the costs of the tax system – outweighed any theoretical benefits from including the gains in the tax base. The government agrees with this analysis.

“In other words, any new form of property tax is off our agenda. In our judgement there is more than enough scope to ensure that the tax system provides New Zealand investors with a largely neutral investment environment.” However Cullen also reaffirmed thatthe government wanted to see greater diversification in investments by New Zealanders. “From a broader point of view we have made no secret of the fact that we would like to see an increase of domestic savings with diversification into a wider range of investment vehicles. We think it is important over time that we become a nation of share owners as well as, but not instead of, a nation of home-owners,” he said.

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