Cullen rules out any new property tax

Finance Minister Michael Cullen has ruled out any new form of property tax and says the housing boom is over.

"Our position on the taxation of property is that the status quo is quite adequate," he said today in a speech to the Property Council of New Zealand.

"All things considered, change does not promise significant overall benefits."

Dr Cullen said the tax review carried out in 2001 considered whether capital gains should be taxed on a more comprehensive basis and concluded the disadvantages outweighed any theoretical benefits.

"The Government agrees with this analysis," he said.

"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."

Dr Cullen said residential investment growth was estimated to have fallen to zero in March this year and was forecast to be negative in the 2006 and 2007 March years.

Despite this, property remained an important element in a well-chosen investment portfolio, he said.

"From time to time there are calls to introduce various forms of property tax in order to achieve the much-vaunted 'level playing field' amongst different asset classes.

"A level playing field is, after all, only a theoretical concept. Real playing fields have their soft patches, slight tilts and areas of subsidence.

"Within certain limits, the players learn to work around them without affecting the quality of the game."

- NZPA