A study ranking New Zealand the lowest for property purchase tax highlights a missed opportunity to make housing more affordable and boost supply, according to an economist.
The international comparison of 26 countries conducted by accounting and consultancy network UHY showed New Zealand at the bottom of the table, with purchasers here charged nothing to transfer a US$1 million property unless they are GST registered.
"New Zealand has no central or local government transaction taxes on real estate and residential property deals between home-owners, as they are exempt from the Government's goods and services tax when the transaction is between two persons who are both unregistered for GST," UHY said.
Independent economist Shamubeel Eaqub was concerned about New Zealand's ranking. "We've got a tax system with a very light touch when it comes to property, whether it's capital gains tax or stamp duty," Eaqub said.
"It would be a very good thing for New Zealand to tax property purchases because we can ring-fence that tax income. It wouldn't be just a revenue grab but would be used to make houses more affordable and increase the supply of housing."