'Not suggesting it to quash the property market' - expert says capital gains tax is needed to help future generations

October 2, 2017

EnableMe's Hannah McQueen says the economy has been helped from gains in house prices, so something needs to be put back.

A capital gains tax is a fair and necessary step to relieve New Zealand's future generation of the burden of an inflated property market, but an illogical fear stands in the way, money expert Hannah McQueen says.

Hannah McQueen from financial advisers EnableMe said people don't like the concept of any tax, but a capital gains tax is actually a constructive way for home owners to repay an economy that has helped raise the price of their own house.

"Because it's a tax, and we don't like tax generally, there's a fear that it's going to tax innovation and people who have really put a good effort in and who have distinguished themselves by the amount of effort they've put in they should have that reward and I agree with that," Ms McQueen told TVNZ 1's Breakfast today.

"But I think a little bit of tax isn't going to hurt anyone and it's going to be really valuable for the next generation."  

Ms McQueen said a capital gains tax would only need to be five or 10 per cent of a given capital asset.

"Something to capture that the economy has helped create this gain, we need to invest something back into the economy."

Ms McQueen said if New Zealanders don't want to consider a capital gains tax then a "serious conversation" needs to happen around raising the retirement age.  

She said she didn't think a capital gains tax would have a lasting effect on the economy: 

"I'm not suggesting it to quash the property market, that's driven by supply and demand, but I do think that if we've got more capital staying in the country then that's going to be good for businesses who need capital to take their innovation and make something from it instead of selling their ideas offshore."

Ms McQueen said that, over the next 20 years, for every person entering the New Zealand work force there are 10 retiring, and therefore an unfair burden will be placed on future generations to support the economy.

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