Taxing the profits made on a family home makes sense from an economic perspective but it would never happen because of the political fall-out, says Westpac boss David McLean.
Introducing a capital gains tax has become a political hot-spot this election with Labour's Jacinda Ardern opening the door to the idea, although she has ruled out including the family home.
Despite a slow-down in the Auckland property market, houses remain highly unaffordable for first home buyers in New Zealand's largest city.
But McLean, who presides over one of the country's largest banks, says even if a capital gains tax was introduced on investment properties it wouldn't solve the housing issues on its own. "Just look at Sydney," he says pointing to its rising house prices despite there being a capital gains tax in place.
"There is a no simple quick fix. It's about supply and demand - and having a wider range of policies to deal with that." But he says it is also important to make sure we have a level playing field for investment. The tax advantages of property mean that is where money is going - not into the capital markets or being invested directly into local businesses.
