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The International Monetary Fund (IMF) has given New Zealand a clean bill of health in its annual assessment of the country's economy and policies, with just a single recommendation on tax policy.
The IMF said: "New Zealand is enjoying a strong expansion driven by record high net migration, strong construction activity, and accommodative monetary policy." Most of its recommendations discuss financial services policy.
On tax, the IMF noted supply constraints in the housing market. It said: "Targeting housing-supply bottlenecks more broadly would safeguard the attractiveness for high-skilled immigration and business." It recommended that measures should include "some central government funding, more efficient property taxation, and user charges." In particular it said New Zealand should look to "redirect savings incentives from housing to other investments."
"A broader capital gains tax on real estate would lower the incentives for investment in housing," it said, adding that "limiting negative gearing for rental properties would work in a similar direction."
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