In the wake of ballooning house prices, Green MP Julie Anne Genter is questioning Jacinda Ardern's decision to rule out introducing a capital gains tax (CGT) while she's Prime Minister.
Ardern ruled out the prospect of a CGT under her leadership in April 2019 after Labour and the Greens were unable to reach a consensus with New Zealand First.
The Prime Minister felt she did not have the support of New Zealanders, despite all members of the Government's Tax Working Group (TWG) led by Sir Michael Cullen recommending a CGT on the sale of residential rental properties.
The TWG estimated it could have generated $8 billion over the first five years.
Almost two years have passed and house prices are soaring out-of-reach for many New Zealanders. Median house prices in Auckland recently surpassed $1 million and nationwide it's now above $720,000.
While earlier this year economists tipped house prices to fall thanks to the COVID-19 pandemic, the opposite happened - fuelled by low interest rates and the Reserve Bank's removal of loan-to-value restrictions (LVRs) making it easier to purchase a property.
The Reserve Bank is preparing to bring back LVRs by March next year, in which case banks would likely require investors to have deposits of around 30 percent to get mortgage lending.
The Greens believe the answer to the housing crisis is some form of CGT, which operates by treating capital gains as taxable income. In Australia the family home is exempt, which is what they proposed for New Zealand.
Genter said in a Twitter post that when the TWG proposed a CGT for New Zealand polls showed slightly less than 50 percent support, and she blamed that on the National Party campaigning and "misleading" voters against it.
But she doesn't think the Prime Minister should abandon it altogether, especially now that Labour has been given the power to govern alone.
"I don't think anyone can seriously claim that the 'New Zealand people' ruled it out for as long as Jacinda is PM," Genter said on Twitter.
In the comment section someone wrote: "Right? I was like, um, did I miss a referendum or something?"
Genter replied: "Exactly."
Green Party co-leader Marama Davidson is also calling on Ardern to use the tax system to tackle skyrocketing house prices and reverse her ruling out of taxing property wealth.
"At this time the Government should be considering changes to the bright line test or some form of taxes on large accumulations of asset wealth," Davidson told Stuff.
The bright line test is a variation of a CGT which already exists in New Zealand. It requires income tax to be paid on any gains from residential property sold within five years of being purchased.
Ardern has been asked repeatedly throughout the week if she will reconsider introducing some form of CGT as pressure grows on the Government to find a solution to rising house prices.
"I didn't necessarily have the rest of New Zealand in agreement with me on that," she said at her Monday post-Cabinet press conference.
On Tuesday she said: "We already during the election put forward our plans around taxation. Everyone knows that for a number of elections Labour did campaign on a capital gains tax. That was something we weren't able to win over New Zealanders with those campaigns and we've accepted that."
During the election campaign Labour promised no new taxes except for its new top tax rate of 39 percent on income earned above $180,000. Labour also ruled out the Green Party' proposed wealth tax.
In 2017 Labour campaigned on KiwiBuild as the housing crisis solution, promising 100,000 houses in 10 years, but with just 258 houses built as of September 2019, the policy was 'reset' - the targets were dropped and it shifted towards progressive homeownership.
On top of progressive homeownership, the revamped KiwiBuild included changes to the requirements for a KiwiSaver HomeStart grant. The deposit requirement was reduced from 10 percent to 5 percent, making it more accessible.
Ardern has asked for advice on how to further aid first-home buyers with deposits.
Labour also plans to repeal the Resource Management Act (RMA), the complex piece of planning law which has been blamed for holding back new developments.
Ardern has argued that despite the failings of KiwiBuild, the Government has built more houses than any Government since the 1970s, particularly state and transitional homes.
The Government is pumping $5 billion over four years into building 8000 state and transitional houses in partnership with housing providers.
"Had we seen the last Government build public housing at the rate that we currently are we would have been able to clear the waiting list by now," Ardern said on Monday.
"Would I like us to be able to do it at an even greater rate? Of course. But there are limits to what we're able to do with some of the workforce constraints that we have and the capacity we have to even push it out to where we are."
