Tax package shrinking, says English

13:54 March 18, 2010Article1 comment

Article – Businesswire

March 17 (BusinessWire) – Finance Minister Bill English is talking down the size of the tax package for the May 20 Budget, saying Treasury analysis was finding a smaller contribution available from rental property tax changes than was estimated …

Tax package shrinking, rental property sector smaller than first thought: English

by Pattrick Smellie

March 17 (BusinessWire) – Finance Minister Bill English is talking down the size of the tax package for the May 20 Budget, saying Treasury analysis was finding a smaller contribution available from rental property tax changes than was estimated by the Tax Working Group.

The Victoria University-led TWG reported in January that up to $1.3 billion in tax could be raised.
“As (the Treasury) have done more work, their estimates of revenue have tended to come down,” said English during questions at a Beehive press conference to launch the creation of a new Productivity Commission.
There was “significantly less than the TWG suggested”, said English, who remained determined to change tax system anomalies that encourage a disproportionate amount of New Zealand’s private investment into housing.
“The trade-offs are a bit tighter,” said English of the capacity to use money raised from ending depreciation allowances on rental property to help fund personal tax cuts and offset an increase in the rate of GST to as much as 15%.
“It doesn’t make any significant difference to the tax policy issues”, which boiled down to lower than desirable effective tax rates for many rental property owners.
The TWG found that residential housing assets were worth some $200 billion, but rather than contributing to the tax base, the sector as a whole was receiving around$150 million in tax refunds annually because of the way the tax system currently works.
(BusinessWire) 13:52:55

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1 comment:

  1. winston moreton, 18. March 2010, 22:30

    Why not make the GST system cheaper and easier to administer by removing the residential rent GST exemption?

    That would inflate housing investers contribution to the May 20 tax take and landlords would have to wait for rent review dates before the cost could be passed on to tenants. Many would absorb the cost to keep good tenants and stay competitive.

    Make the cost of GST admin cheaper still and remove the exemption on financial services? Unthinkable..

     

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