John Key dismissed it AGAIN on breakfast, good on him too. Sort out the capital markets so there are other productive places to invest rather than taking the socialist route and taxing everything.
National wernt elected to impose taxes, they were elected to cut them and government expenditure.

I think that there will be lots of arguing over what is considered a "family home". How about beach baches that aren't investment properties and are stayed in as holiday homes only? This one obviously affects John Key personally - I'm not sure whether Goff has an Omaha retreat.
it's good to see that they are at least considering a capital gains tax and I think that it is probably the best move Goff has made as leader to throw his weight behind the idea.
@David - do you think that we shouldn't tax any investments? Why tax people for working and not tax them if they make money sitting on their chuffs doing nothing but owning a business or property? Good on ya Bernard- this one is a win for you.

My below post, and the one that follows it, gives my view on the CGT ... again. I don't like Key, but thank goodness he had the wherewithal to scorch a CGT on Breakfast this morning.

http://www.interest.co.nz/ratesblog/index.php/2009/09/11/90-at-9-exporte...

Sorry the first sentence should say no capital gains tax, freudian slip maybe.

John Key stated categorically on Newstalk ZB this morning that there would be no CGT under his watch. He stated the obvious - ie UK, Oz etc all have a CGT yet their housing markets boomed just like it did in NZ - ie a CGT would have made zero difference. In fact Oz even has stamp duty and first home buyers grants. So no need to fear a CGT in NZ as it will not be happening this term.

Andy Hamilton - recession II - what is it and how will it come about, 10 years time maybe? Everything I am reading says the recovery is well and truly underway. http://www.cnbc.com/id/32804739

"Why would anyone invest in any other type of investment, be it on the stock market or in business directly, when there is a massive tax break for property?
We will not find true alternatives until housing investment is taxed."

Do we tax capital gain from stock market ot busisness?

Bernard --- agree tax reform overall will be an increasing issue. It seems to me that the LAQC matter in property is bigger than CGT.

Given Key's comment about the Govt. pehaps putting more into "party central" over the weekend to the surprise of his World Cup minister and his flat insistence of no CGT do I sense he is moving into "Helen Clarke " control freak mode.

By going pro CGT Labour have now given National a second and maybe third term on a plate so no need to worry about a CGT for the next 5 years.

Was it National or Labour who introduced LAQC into law?

Lara - I think perhaps you should diversify your reading away from just cnbc.

Any nascent 'recovery' will be choked off as oil goes back over $100. Its not rocket science.

Its not just rorts such as LAQC that the Treasury will be forced to eventually end. Governments with mounting deficits have to eventually cut spending/ensure maximal tax collection. Recession II will focus minds rather more clearly on these issues at the Beehive.

invest in the productive sector - robotics and technology, they are productive, then everyone can be unemployed, and it wont matter if they cant pay rent, as there will be no landlords, just tax funded state housing - wow that should save us paying tax (not), there will be no income, except from "the pixies down the back of the garden" who can tax the benefit at source, reducing printing costs and robotic repairs and maintenance...

get with the programme people, LAQC is no different to a partnership, or any other of numerous businesses. why do people think being a landlord involves no work, is it because they are the types of people that shit in their own nests, leaving it to someone else to clean up once they are gone??? the type of people with no respect for someone else's property (housing or otherwise)

I think we need to face the facts. The Govt needs to increase revenue to keep the bloated state sector functioning. They are obviously unwilling to slash the state sector so get used to paying more tax. We may have a complete change in the way we pay our taxes, the one thing you can be sure of is we are going to pay more. Yes we may get a CGT, land tax an increase in GST, probably all 3 but at the end of the day it is a transfer of wealth from your pockets to the Govts.
The debate needs to be about how much govt we actually need and is it beneficial to our society.

David
It is not me, itis Bernard talking about the massive tax advantage in property investment. Actually, there is no tax advantage exist.

Bernard is kind of missleading.

Actually, I'm starting to go away from my belief that a CGT would make much difference. It will just get "priced in" I think, and even worse, the only real winner will be the Govt. I still have a bee in my bonnet about WFF (I don't have kids so get even more irrate about it) and LAQCs. Remove those two rorts and the playing field might even out a bit.

Judging by the antipathy of some of the comments expressed towards any change in the way housing is treated the Treasury does indeed seem to have a some very juicy birds to pluck in the future!

And eventually they will be forced to do the plucking...........

By ruling out the use of the Reserve Bank's capital adequacy powers to force banks to slow their lending to property, which is the most cost effective option, Bollard is clearly leaving the government with no other option. Tax reform is on the cards.

However, tax reform won't see property investors divert to the market, hence the current imbalance will continue to be problematic.

Moreover, overall tax reform runs the potential risk of sending far more of the nations wealth offshore, exacerbating the fiscal imbalance.

The government should use the revenue from a CGT tax to help kick-start a number of new export ventures as part of its economic stimulus package (the rolling maul).

Viable sectors and new markets could be identified with the public given the opportunity to get onboard.

Government involvement in new export ventures will not only give investors a viable alternative but will also help improve investor confidence and overall market competition, thus helping to improve overall accessibility to local capital.

These new export ventures will give not only the government but also mum and dad investors the opportunity to generate an offshore return, which also helps to correct the fiscal imbalance we face.

This new offshore return will broaden and increase the government's revenue stream ultimately enabling them to cut taxes (with a long-term goal of becoming more self-funded) while actually correcting the fiscal imbalance.

The only way to cut overall taxes, still maintain services and not incur substantial user pay costs, is for government to generate alternative revenue streams.

I think the key issue behind all this is the undeniable fact (except perhaps to the die-hard landlords etc) that NZ's productivity & export sector have stagnated for years. We can no longer afford a 1st world education & health system, & this is only going to get worse. At the same time, the govt costs are going to keep increasing, as the boomers get seriously into retirements & greater health issues. That is a demographic fact that isn't going away.

So the idea of decreasing taxes is a myth. OK, maybe there are wasteful areas of govt spending that can be reduced (& that should definitely happen), but it ain't going to make a lot of difference.

So on both these fronts, the Nats have to do something to improve the tax base, if they want to increase exports & keep a viable income stream for govt spending. If they don't gradual decline in our standard of living is absolutely inevitable. So if they shut the door on CGT, they have to keep the door open to other forms. Maybe increasing GST is an option, but doing that on its own would simply add to the inequities that are now structured in.

You can't say "no" to all the options. Not possible.

re Andy Hamilton - sounds like you are one of those "peak oiler" scaremongers - LOL!

Peak oil is not a problem for at least 20 years, maybe 30 - humans are very versatile and will find other means of surviving. Look at the tecnological advancements that take place over each 10 years period. 100 years ago we had only just come out of horse and cart now we have electric cars and soon hydrogen cars. Plastics and other products will be replaced by made from less oil reliant products and recycling will kick in big time.

If the price of oil goes up then it will be more viable to explore and drill for more fields so in some respects it will be great if the price goes up over $100 - people will also use cars less and change to electric/hybrid or bike/scooter.

Many people on here and elsewhere seem to be so disaapointed that the global crisis has been short lived - just get on with life and don't worry so much. Grow some veges, buy a bike or scooter, get a bit self sufficient and move on.

Face the fact that you were wrong - this is a recession sure but it ain't a depression and was never likely to be with Obama on the case.

We are lucky in NZ as we have not been impacted anywhere near as much as other countries and our government has been able to tough it out with no need for any stimulus and probably didnt need the bank guarantee either.

Property traders already pay tax on profits. Those that hold onto property are no different to farms going up in value, a business growing it's clientele and hence value (goodwill) or shares increasing in value. None of these gains are taxed. If a person makes a business out of buying and selling any of these these for profit they may be taxed on the profit. If a CGT were introduced, would it allow for inflation. Why should everything else cost more due to inflation but property be penalised and taxed if it too happens to rise in price? People often invest for the long term in property because the returns from rent are fairly steady, reliable and under your control and property value fluctuates less. This can't be said of shares which can go to zero e.g. Dominion Finance. I haven't heard Alan Bollard apologize to the public after suggesting they put more money into the share market and less into property a year or two ago.

NZ Property Investor Magazine's Philip Macalister notes on his latest blog:
"Already it ( the IRD) has pulled in hundreds of millions of dollars in unpaid (assesable property ) tax."
Isn't this the major problem with property? Too many people trying to 'get away' with whatever they can. Dishonesty is at the root of most of NZ'd problems.

Lara - when oil is once more again over $100 we will revisit this conversation - and you can tell me again how wonderful for the economy it is.

However I shan't stand in the way of your cornucopianism any further - speaking selfishly you do fulfill an important function. After all is peakoil was in anyway accepted or understood by the general population (of which I would say you hold a fairly typical viewpoint) it wouldn't be nearly as easy trading the oil price/oil companies profitably.

To be honest I don't think CGT is the answer. It's another red herring designed to distract people from the real problem.

IF there should be a tax on property it should be a uniform land tax.

But I would far prefer to see higher capital adequacy for banks brought in.

House prices are too high compared to wages because of the LAQC system and very easy credit availability.

Removing the LAQC would do the trick as would requiring higher deposits.

CGT is a bureacrats dream and will just add more layers of red tape.

@ Raf - I'd vote for you if you were a politician. Your posts always make perfect sense and I agree with them.

@Lara: "If the price of oil goes up then it will be more viable to explore and drill for more fields "

Ever heard of the American buffalo hunters? they shot the buffalo to extinction....no matter how many hunters and trackers you would have employed, you would not have got any more after the last was shot....thats it. What your statement says is this is an infinite planet with infinite oil, we just have to find it, that's farcical...

Explore ~ Its pretty much certain that just about every sq km on the planet has been examined by at least one major oil company, probably 3. The geology of oil is very well known, in fact its probably better known than any other sphere of geology....

a) The rocks have to be the right age.
b) They have to be the right type
c) they have to have had the right entrapment cycle
d) They have to have been at the right depth for a period for the cracking to have occurred.
e) They have to have an impervious cap stone or material (salt is a favorite)
f) They have to have a trap type shape, to trap and concentrate the oil ie a dome....

So, they know what they are looking for and they have the tools to do it.

"Peak oil is not a problem for at least 20 years, maybe 30 "

1) Not true, its here or will be in 5.
2) It would take 20 years to migrate, go read Robert Hirsch's 2005 paper.

"now we have electric cars and soon hydrogen cars."

how many electric cars are on NZ's roads today?, maybe a few thousand...aganist petrol? millions? how many electric cars are made per year?

Hydrogen cars, go read, that stuff is at least 20 if not 30 years away and probably wont ever be economic, EV makes way more sense.

"Face the fact that you were wrong - this is a recession sure but it ain't a depression and was never likely to be with Obama on the case."

It isn't over until the fat lady sings.....

All I can say is you appear to be extremely ill-informed, or dont care about many of the facts about peak oil, energy efficiency, engineering and the sorry state our financial/banking/economic situation. Fundamentally our global society is faces huge challenges, gambling "it will be all right" could in the extreme case add up to a serious collapse/slump....mitigating it may just hurt quite a bit.

As AH says, it will be interesting to see who's right over the coming 5 years...I dont think it will be someone who gambles without understanding the facts and the risks...but who knows about luck.

regards

@ Harriet - there's a thought! Thinking that through, it doesn't matter how sound his ideas are and how much I agree with them, once you're a politician it seldom goes any further than being an idea. Still, a big thumbs up to Raf.

I get sick of Bill English and John Key snivelling and wringing their hands, muttering about the ratings agencies and not doing anything on tax reform until they see what Australia does. We're either a sovereign nation or not. Now Alan Bollard throwing in the towel has shown who is really in charge of NZ - the CEO's of the 4 Aussie banks. Hey guys, do what you wan't, we're happy to scrape up your crumbs.

A great way to help stoke the silly value of residential real estate. It loads the tax exemption on the accommodation you occupy and so encourages sky high house prices as in the UK.

It also means the government will have to become the primary provider of residential rental accommodation as it destroys the private economy.

It de-stabilises the tax base as in California - the tax stream stops when times get tough.

Oh the wonders of simplistic solutions.

What exactly does it provide the solution to?

Indeed veedub, and now that Bollard has ruled it out, it's sadly no longer even part of the debate.

here's a good piece from Liam Dann from the Herald as to why, although a great depression looks to have been avoided, things are far from rosy:

http://blogs.nzherald.co.nz/blog/liam-dann-business-editor/2009/9/12/fra...

Sigh. To the Peak Oilers infesting the thread, may I wearily direct yer attention yet again to one of the definitive statements aboot li'l ol' NZ's potential for weathering this storm in a teacup.

The money quote:

"If extracted at a rate of 20 million tonnes per year, the lignite resource could provide energy and feedstock for most of New Zealand's transport fuel and petrochemical requirements for over 300 years."

Now see SASOL for the conversion technology. Think globally, act locally.

Back to normal programming, chaps and chapesses.

Would be interesting to know if there's anyone opposing who doesn't actually have any investment properties.

Eastie : If the LAQC provisions were repealed , the CGT becomes unnecessary . Stop the jumper in the first instance , rather than provide an ambulance at the bottom of the cliff .

CGT or not, Property is the only logical investment in NZ. No industry that has players large enough to list would be a good investment: Manufacturing is collapsing and can never recover. All the added value has been lost from forestry & farming outputs (eg boutique dairy products have been replaced with milk-powder.) Utilities, including telecommunications, only make profits at the expense of what productive sector NZ has. Tourism is a large sector as is technology innovation, but individual operators tend to be very small and individually risky. There is nothing here to invest in, except property. As long as NZ remains attractive relative to the rest of the world, and population keeps increasing, people will want to buy property in NZ. It's all we have.

Pres. of Prop. such avarice, such shortsightedness such greed ! Key, an arch populist, will not do what is necessary until he is forced by circumstances and that by definition will be too late (at least in the medium term).
Paul: "Manufacturing is collapsing" got anything to do with the difficulty of obtaining reasonably priced finance do you think? Exporters difficulties anything to do with forex rates do you think ?

I suspect if Manufacturing was viable in NZ reasonably priced finance would probably make itself available. The problem seems to me to be more related to distance from major markets, too small a domestic market to get started in, and labour costs higher than China, Poland etc.

Mike in Welly, "NZ is best placed" except for any hope of exporting I suggest. We need oil to get our export produce to market.

Could we not impose a CGT for gains made on property within say 1-5 years? Maybe gradually decreasing each year?

Or how about some kind of restriction on using equity as a deposit for the next property? Along the same lines as above, say you have to own the property for a year before buying another property using equity. (Property only)

Was/is that on all property, Andy or just ones that got classified as 'not the family home' ? As most people stay in their real homes for an average of about 4 years, seems to make sense that it could be all encompassing?

Crikey andy : Pomania can keep that little potage . What a convoluted shambles . We want to sign up for that ? More grist for tax-planners and accountants . They got enough , thanks to Michael Cullen , to keep them snuffling in the trough of our money , as it is .

Oh and with regard to shares and other related assets - there was also the capacity to carry forward losses made in your dealing in any given year and offset them against CGT profits in future years as I recall.

Not to sure about that mechanism - fortunately never had to use it :)

And the winner is ... NZICA: http://www.scoop.co.nz/stories/BU0909/S00364.htm

"A capital gains tax is not the magic bullet for economic stability," says NZICA's tax director, Craig Macalister, in response to the Reserve Bank's call to consider a tax on property speculation or to alter the way rental properties are taxed.

Mr Macalister said there was too much propensity for people to look to the tax system as the magic lever to be pulled when some behaviour in the economy needs changing.

"There are many complex factors that come into play: using the tax system to target bubbles in the markets is fraught with danger.

"In relation to concerns about the overheated property market we have seen suggestions in recent times to introduce a capital gains tax, a property speculation tax, or even to limit the deductibility of rental losses as a means of cooling investment in housing."

Mr Macalister said the wider implications of such calls often were not thought through and frequently overlooked key details, such as the fact that New Zealand already has a tax on properties purchased for speculative purposes and importantly that developed countries have capital gains taxes and other property taxes such as stamp duties, yet still experienced a housing price boom.

"In addition, the incidence of any general capital gains tax may be factored into the price of our housing stock and yet further impact house prices. That is, contrary to cooling prices it could actually increase prices and make home ownership less affordable.

"Similarly a corollary of limiting deductibility of rental property losses may lead to a reduction in supply and an increase in rents, contrary to Government objectives to provide better quality of housing for people.

....

But in other news, NZ mainstream economists, having been bloodied on their headlong rush to make the government implement a CGT have now moved their attention to a tax on breathing.

Such a tax can be expected to correct the imbalance in our economy of over investment in property, because some property owners will choose not to pay the breathing tax by suffocating themselves.

This tax also has the almost miraculous side effect of aiding the nation's attempt to drive its economy into the ground via an ETS. Taxing breathing is effectively a tax on an individual human beings carbon footprint. It is proposed a bipartite tax be legislated: that is, to tax the breathing of oxygen in, and then the taxing of CO2 out. The oxygen tax will go to the consolidated fund to subsidise the breathing of the beneficiary and the State sector, while the taxing of the CO2 can be bought by the farming sector to offset their liabilities from animal farting.

Those members of the public who are global warming deniers, may fairly choose not to breath out under this scheme, whole those ideologically opposed to the Welfare State can choose not to breath in.

According to economist, Mr Sacha Fool, this is truly the miracle tax of taxes, everybody wins, and due to a dwindling population, productivity becomes less and less important.

As noted by Richard Prebble page 96 of his book - Ive Been Thinking -
"Increases in credit by the Reserve Bank greater than any increase in production in the economy in New Zealand has been very inflationary. When the Reserve Bank increased the M3 by double digit amounts, inflation went to double digits too. I noticed under Muldoon that inflation rose to within one percent of what ever the M3 was the year before. Therefore I used the M3 figures to accurately predict every year in Parliament what next years inflation would be. Its still there in Hansard."

Inflationary bubbles are caused by the amount of money in circulation, how it enters circulation and how it is distributed, That is why GGT or Stamp Duty has not worked anywhere else to prevent housing bubbles.

I sent the following email to 21 MPS in our Parliament with a pdf of my submission to the unofficial banking inquiry ( http://publiccreditorbust.blog.com/2009/08/31/iain-parkers-submission-to... ) I will leave it another week and let you know the results, I can tell you they are not flash thus far:

Regards to Members of Parliament,
To the staff of Members of Parliament and Members of Parliament themselves, this email might well determine if your were ever in Parliament to truly represent the interest of citizens or if you have succumbed to the party machinery and international vested interests, for it contains information from irrefutable sources about a subject that if you ignore the evidence of you have absolutely no right to claim you ever served the people of New Zealand to the best of your knowledge.

This email contains information regarding the many layers of international banking, the Credit Creation Mechanism that sits at its core and just how our credit money supply enters circulation. Credit is the fuel the societal engine runs on, monetary policy is the carburettor, if the mainjet in the carburettor does not mix the fuel and natural resources into the right conditions before being circulated the societal engine will clunk and smoke its way to a premature demise no matter what components you fiddle with downstream of it. Monetary policy is quite simply the common denominator.

The Treaty Of Waitangi was promoted as the founding legislation of this nation that would deliver the umbrella of a rule of law that would treat all the same and offer economic equal-opportunity for all no matter what class or colour. I put it to you that this nation has progressed little from a class system of privilege and due to a common denominator has failed to deliver its promises.

That common denominator is we have been subjected to the predatory lending practices of the privately owned foreign central bankers. That common denominator is made plain, with ample evidence from the mouths of the major players, in my attached submission to the unofficial banking inquiry.

We need school up, speak up or expect to suffer increasingly severe doses of wealth transferring Boom, Bust and Bankruptcy cycles at the hands of unscrupulous foreign financiers and their subsidiary multinational corporations.

I don't expect an explanation from all, just an acknowledgement of receival in order that those that are truly there in the national interest of this nation might get an idea of who is not.

Yours

Iain Parker

The Price Waterhouse spokesman (John Sherwin?) who is also on the body that is to report on tax ideas suggests a land tax .
Question. Why not a tax on the capital value?
The benefit also includes paying a tax on the borrowed part of the asset - a tax added to the interest.
So a 1% tax on a $1m property would be $10k even if there is $900k borrowing and only $100k net asset.
No do not include personal home BUT why not do it by imposing such a tax but having a threshhold below which there is no tax - say $500k. If you then want to live in a $2m property you pay the tax on the extra.

Matt, one of these chaps that wants to plaster over productive land with urban sprawl so he can trade in houses. Cities as they are currently designed are unsustainable sinkwells for credit money. Did you know Matt that every "new" mortgage taken to build a "new" building, that is before it goes on to become a tradable commodity, is written into existance as a debt book entry, credit money never existed before the borrower signed the dotted line, thus a boom in "new" housing causes a boom in the money supply when the fractional reserve credit multiplying effect does its thing.

"The book-entry program of the Federal Reserve, United States Treasury and several federal and international agencies has succeeded in largely replacing paper U.S. Government and agency securities with computer entries at Reserve Banks. By eliminating certificates, government and agency securities are better safeguarded and more rapidly transferred by the nation's depository institutions. "
http://www.newyorkfed.org/aboutthefed/fedpoint/fed05.html

"NEW YORK (Reuters) - Mortgage creation will slump 16 percent in 2008 to $1.96 trillion, breaching $2 trillion for the first time since 2000, according to the Mortgage Bankers Association.
Economic growth will slow through the first half of this year, helping depress loan creation from $2.34 trillion in 2007, the trade group said on Monday..........
Total existing home sales this year will drop about 13 percent to an annual 4.94 million units, before rising by about 4 percent in 2009. Sales of new homes will fall about 15 percent this year to 666,000 units before rising around 7 percent in 2009."
http://www.reuters.com/article/gc03/idUSN1433149720080114

For pete's sake:

There is already capital gains tax for property traders / investors.

If you purchase a property for the purpose of reselling or trading the IRD deems the profit as income and you pay tax accordingly.

If you sell a property that has been run under a LAQC any deprecation has to be paid back

Bernard;
If you want to eliminate a perceived tax advantage with property investment then go for the LAQC system. CGT is a side issue that has not worked in other country's.

Iain said:

"Matt, one of these chaps that wants to plaster over productive land with urban sprawl so he can trade in houses."

Iain, you couldn't be further from the truth. :)

I don't support urban sprawl at all, I support urban consolidation (although I am not totally opposed to some strategically located and selected rural to urban rezonings on the urban periphery). A city like Auckland is incredibly low density and could easily accommodate over 100,000 more people without having to sprawl. And we don't even have to go to apartments over 4 levels so we are talking far from high rise!

But the planning rules are biased towards low density housing and people are so, so terrified of anything over two storeys (shock horror) so until there is a major shift....

Matt, agree or disagree? "Cities as they are currently designed are unsustainable sinkwells for credit money."

Having lived in Aus for ten years upto returning 2004, I can tell you first hand it aint all its cracked up to be. When first homebuyer assistance came in sellers simply added it to the top, bankers were the only ones profitting from tax funds.

Agree Lara, it is a credit money supply problem at the core, no amount of fiddling with distribution after the fact will solve that:
http://www.interest.co.nz/ratesblog/index.php/2009/09/14/have-your-say-l...

Full of metaphor. Keen's view on the current state of play

http://www.businessspectator.com.au/bs.nsf/article/good-economic-theory-...

i remember Bernard said in Parliament few days back the CGT or land TAX will drive down house price 10% to 15% immediately. Lara, how do you explain that?

Where will all the current rental properties go, Mark? Some, possibly sold to people who currently rent? And rental properties will always be a viable business when they are just that, investments, and not just speculative assets. You, of all people I read on this site, believe that sustainable welath comes from productivity and not gambling.

Very good post Gibber!

The only form of CGT that would work is one where unrealised capital gains are taxed each year. Now that would really have an impact - never gonna happen though!

Good thread, chaps and chapesses. Once we all get off our hobbyhorses.

Paul's very pessimistic view of exporting is not warranted. NZ has been a fabulous well of creativity in software (SunGard, Jade, Wherescape). Farming products such as low-micron fibers are selling into top-line boutique markets, as are our cheeses and wines. So enough with the frown and droopy lips. We are clever people, with an attitude moulded by great open spaces (Wellington excepted, sorry) and despite the best efforts of 20 years of educators, a can-do, knock-em-dead approach to problems.

But I digress.

If one takes the housing bubble as having four sources (ht Rees-Mogg)

1. license housebuilding, so that no one could build a new house without a licence, or even rebuild an old house or a redundant barn.
2. encourage developers to maintain large land banks in order to benefit from rising prices.
3. leak out new permissions only after long periods of delay.
4. combine this with an unlimited flow of mortgage credit and relatively low rates of interest.

Then the requisite actions for stopping the next bubbular eructation become clear.

1. Unwind the ridiculous credentialism surrounding building. Most of us grew up in houses built by (Gasp!) unlicensed geezers. Most under-the-radar renovation(and there's a Lot of it) is still done this way. Put it like this: when was the last time you saw a headline about 'house collapses on occupants'? except in some far-off land? And the leaky-building debacle is preventable with two simple design mandates: roofs with as few ridges and valleys as possible, and actual Eaves....

2. Land tax or differentially rate the living bejasus out of banked land to place a steep holding cost on it. Raising the 'carry' is a sure way to move things along.

3. Speed the planning process (and will someone remind us of what it's actually good for, again?). Word is that at least one Regional Council is about to have the Powers that Be go mediaeval on it. But at least pre-consented standard designs would be a Good Thang to start with.

4. Make credit hard to get and more expensive. Well, that's certainly happened, but for the wrong bits - businesses, exporters and the like. Housing credit is headed for another Greenspan put if we're not careful. That's shurely wot AB@RBNZ is paid to figger out. And it's not as though the spadework hasn't been done here: the Westpac crew had this nailed way back in the day (Appendix 4, Bubble Schmubble is the key read)...harmonise personal, trust, and company taxes, and one huge driver of the bubble - tax-rate arbitrage - vanishes permanently.

There!

Wasn't difficult, no? And didn't require a CGT, either. I agree with several posters: it's noise, not signal.

But unless these four causes are all addressed evenly and simultaneously, there ain't a capital-S solution, IMHO.

Capital S?

Capital?

That's it! Capital Letters Tax!

Gingerbreadman - neither did a land tax.

This may make people think twice:

Victorian business owners are set to cop land tax increases of up to 400 per cent as the Brumby Government prepares to rake in a record $1 billion from the tax this year.
http://www.heraldsun.com.au/news/victoria/land-tax-to-soar-in-state-stin...

Waymad --- I'm impressed with your enthusiasm about NZ's creative ability etc and i would generally agree. But I think NZ businesses need to be much more forward thinking and innovative in their strategic planning. An example ( in line with Neville's column in the weekend ) --- I met a Chinese student last year who had just graduated from Victoria Uni with a B.Achitecture ( Interior Design ). Her carrer plan was (is) to work in New Zealand for 3-4years to get experience of working from concept through to the final building., because in China it is normal just to "photocopy" plans from a previous job for a new building. Then she wanted to go back to China and set up her own business doing it the NZ way for the "new rich ". But despite tremendous efforts she can not get a job oin NZ. Would it not be a great opportunity for a NZ company to latch onto her idea and eventually JV with her when she goes back to China --- but I suppose that would take abit of lateral thinking.
I realise last year was not a great year for her to be looking -- but she has not given up.
( NB Of the 26 in her final year class --24 got a plane after graduation to live and work overseas. One got a job in NZ )

Matt: I'm a traditionalist when it comes to domestic buildings and it is arguable that too much innovation (roof, balcony and deck designs spring to mind) was a Leak driver.

There's also highly local building traditions (such as the Canterbury Plains houses which were frequently built with a 44-gallon drum full of concrete as a foundation at the north-west corner, and a tie wire taken from that right up and over the roof ridge to stop it making like an aerofoil in the gusty nor-wests) which have been totally lost with the rise of amalgamated TLA's and desk-bound staff.

As Stewart Brand notes (How Buildings Learn), the architectural signature is all too often a leaking roof.....

So I tend to the 2 x A2 max, builder-friendly design school. And save the architect's 10% fee. After all, we should ask what value-add accrues from a council permit, a scaffolding certificate, a resource consent, a development levy, a building industry insurance levy and so on.

To mangle Swift:

So architects observe, a fee
Hath smaller fees that on him prey,
And these have smaller fees that bite 'em,
And so proceed ad infinitum.

yes, capital gains tax on investment properties is appropriate
it would help steer investment towards productive assets and away from property
it should of course not apply to principal residences

Actually you would see less capital gain (as a % of purchase price) on a million dollar mansion then you would on a standard 3 bedroom $500K home in the burbs.