By Duncan Garner
If you own a second property, or an investment property, the Government appears to be lining you up. Today Prime Minister John Key told Cabinet, and tomorrow he'll tell Parliament and the country.
But this afternoon he dropped the hint that loopholes allowing property investors hundreds of millions of dollars of tax refunds will be closed.
Mr Key also lined up Reserve Bank governor Alan Bollard, fuming over comments he made about New Zealand's inability to close the income gap with Australia.
"I don't think we should be as fatalistic as saying we can't do it," says Mr Key.
Dr Bollard effectively said Mr Key's central plank of closing the wage gap with Australia was laughable, but Mr Key has to move on.
Tomorrow he sets out his government's priorities for the year. Arguably his most important speech since taking office, he will outline the Government's response to the tax working group and what changes will be made.
Mr Key must decide whether to increase GST to 15 percent. The experts also recommended a land tax and some form of capital gains tax on investment property. Experts have also said the top rate of tax and corporate tax needs to be reduced, and perhaps aligned if New Zealand is to remain competitive with the world.
And Mr Key is hinting he will close the many loopholes allowing people tax refunds on investment properties, worth hundreds of millions of dollars every year.
"If it allows people to engineer their affairs in such a way that they don't pay any tax at all, but continue to consume publicly-supplied goods - whether it's health, education, roading, policing - that's unfair."
But the Property Investors Association says any moves to target the sector will see costs passed on renters.
"A capital gains tax on rental properties would cause rents to rise," says Andrew King.
Mr Key's speech and his plan of action is much anticipated.
3 News
Read Duncan Garner's blog for more insight on the tax reform issue.