WELLINGTON: New Zealand could further improve its tax system by introducing new housing-related charges, the International Monetary Fund (IMF) says.
As part of its annual consultation with New Zealand, the IMF recommended that further housing-related tax measures, such as broader taxation of capital gains from real estate, could be considered to reduce incentives for leveraged real estate investments by households.
It said: “Such measures could help redirect savings to other, potentially more productive investments and thereby support deeper capital markets.”
But New Zealand authorities were reluctant to consider any more housing-related tax changes, given that the country implemented reforms to its tax rules for property transactions in October 2015. The IMF noted that the Government said it would lower individual income tax “when conditions permit.” It said: “The Government is committed to a broad-based, low-rate tax system that has low compliance and administrative costs, and biases economic decisions as little as possible, including on investment in different classes of assets.”
