Wednesday, 24 March 2021

Only a vote for ACT will clear tax minefield


“A vote for ACT is a vote to eradicate the bright-line test,” says ACT Leader David Seymour.

“I have launched a petition today seeking support to repeal the bright-line test and reintroduce mortgage interest deductibility on residential property income. Neither is fair, neither addresses the supply problem that causes house price inflation.

“These tax changes are not only nasty and divisive, they’re totally ineffective. No country has ever taxed its way to affordable housing.

“Further extending the bright-line test vindicates ACT’s opposition to this stealth capital gains tax going all the way back to 2015.

“When National introduced the original two-year bright-line test I said ‘… this tax is the acorn of a capital gains tax. It is a measure that will grow from two years to five to 10 to 15 years. You watch, it will eventually apply to a wider range of homes. It is the acorn that the National Party has planted that will grow into a full-blown capital gains tax.’

“I was spot on. Application of the law that existed before 2015 would have seen tax paid on income from property speculation. The bright-line test was unnecessary but has been allowed to grow into something the then Government never claimed it would become.

“ACT would also allow landlords to claim interest deductions on residential property income, a right the Government proposes to remove entirely over the next four years for houses purchased before 27 March and immediately for houses acquired after that date.

“National thinks you can be a little bit pregnant, well you can’t. You either favour a capital gains tax or you eradicate the so-called bright-line test. It is time all political parties told the truth, the bright-line test has been a dishonest misadventure that punishes the hard working.

“This change will have the perverse effect of forcing those landlords who decide to wear the change and hold on to their properties to drive up rents. That will in turn make it harder for many people to save for a deposit on their own first home.

“It may also force many that aren’t the sorts of property investors the Government claims to be targeting to sell up, because there’s only so much rent that can be charged to offset the now non-deductible interest charges.

“Both these measures are poorly thought through and will hurt plenty of people the Government claims to be trying to help.

“They must be repealed to re-set the playing field and in the meantime focus must be turned to long-term measures allowing for easier planning, zoning, infrastructure funding and house construction. Only that will address house price inflation and make first homes attainable for another generation set to miss out on them.”

ENDS