Opinion: Olly Newland says any form of tax imposed feeds into prices and reminds regulators to remember the laws of supply and demand. Your view?

Olly Newland Interest.co.nz

Friday 15th March 2013

No matter how often the argument against a Capital Gains Tax is put forward, the subject is still popular among those who, it seems, fail to realise that implementing such a tax will solve nothing.

The suggestion comes up again and again, and it has almost become an article of faith for ‘the left’ some of whom seem to imbue a Capital Gains Tax (CGT) with mythic powers to right all social wrongs.

When the Labour Government of the 1970s brought in a version of the tax to curb rampant property speculation, the result was a further rapid rapid rise in property prices - on top of the 50% rise up until then!

Sellers rather withdrew their properties from the market than pay the tax.

It follows that Less stock = Higher prices. (This ain’t rocket science.)

The ’Property Speculation Tax’, as it was then called, was abolished a few years later by the Muldoon government, and I am proud to say that I was partly instrumental for that. Read more

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