New Zealand needs to ensure that there is no return to a debt-fueled housing cycle, its Reserve Bank’s Governor, Alan Bollard, noted when releasing the Bank’s November 2009 Financial Stability Report.
He stated that, while the outlook for New Zealand’s economy and financial system has improved in the past six months, as international conditions have stabilized, some risks and challenges remain.
“Financial market strains have eased, equity markets have mounted a recovery and confidence has improved,” he commented. “However, global recovery has been fueled by stimulatory fiscal and monetary policy settings which cannot be kept in place forever. The New Zealand economy needs to live more within its means to reduce its vulnerability to adverse developments in offshore markets.”
Bollard would not, it was reported, give any indication of the tax measures he felt were appropriate for the housing sector, but he has previously said that all possible means should be considered to restrain speculative property transactions and turn investment to more productive areas.
Following the Governor’s original comments in September, New Zealand’s Prime Minister, John Key, seemed to be against the idea of a property tax. However, the Finance Minister, Bill English, disclosed recently that a tax on properties held for investment (not primary homes) would be examined by the government, and the possibility of introducing a capital gains tax on such properties is currently being studied by New Zealand’s tax working group.
A comprehensive report in our Intelligence Report series dealing with the issues raised by international property investment, and the possible taxation implications raised by such purchases, with an account of the likely (and some less obvious) potential countries for your consideration, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report15.asp
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