Treasury suggested introducing a capital gains tax and restrictions on foreign buyers as part of a long term prescription to curb house price increases, documents released today show.
The suggestions were included in a series of documents about the Reserve Bank's new loan to value (LVR) restrictions released today by the bank, Treasury and the Ministry of Business Innovation and Employment.
In July 2 advice to Finance Minister Bill English, Treasury analysts said the use of LVR restrictions was "likely to be the best available option in dealing with excess demand for housing in the short run, while broader policy to stimulate housing supply takes effect''.
Longer term measures to dampen housing demand suggested by Treasury included restrictions on overseas buyers and a capital gains tax. Both measures are currently Labour and Green Party policy but have been criticised by the Government.
Treasury also suggested levying a land tax on unimproved land.