“Accumulated fortunes in real estate enable and entrench a landed gentry whose incentives to work and contribute in a meaningful way are blunted."
But, they said, the Government had taken the view that neither a capital gains tax, land tax, stamp duty nor a wealth tax was the answer.
"Yet the widespread unease that the growing wealth divide in housing is socially damaging makes doing nothing untenable. Other tools such as bright-line tests, loan to value ratios (LVRs), and non-deductibility of interest for some landlords can be helpful, but they are by no means sufficient on their own.”
They said a capital gains tax could achieve horizontal equity in theory but only if capital gains were measured on an accruals basis. It was more likely that capital gain would only be measured at sale and there would be questions for Inland Revenue to define when a person had bought and sold outside the bright-line test.