The Labour Party, at their annual conference last weekend, said that they will discuss a capital gains tax. Many countries have a capital gains tax so if you buy a house then sell it at a profit, you pay tax on the profit. Some people buy houses as an investment and sell them at a profit. These people would have to pay tax on the profit they make. Bill English, the Minister of Finance, thinks this tax might slow down the rise in house prices. It could also encourage investors to put their money into other areas of the economy instead of housing. However, the Prime Minister, John Key doesn’t believe a capital gains tax on housing would slow down the housing market. He said it hasn’t worked in Australia or the US.
We also need landlords to provide rental houses and a capital gains tax might stop people from buying houses for renting.
The Labour Party said that they would be happy to discuss a capital gains tax with the government. However, they did not want a capital gains tax on the family home.
Governments are frightened to introduce a capital gains tax as it would be very unpopular. That is why they would be happy for the Labour Party to agree with them about a capital gains tax.