Finance Minister Nicola Willis. Photo: RNZ / Angus Dreaver
Finance Minister Nicola Willis says "you can't tax yourself to prosperity" as discussion of a capital gains tax ramps up again.
On Wednesday, ANZ's chief executive Antonia Watson told RNZ's 30' with Guyon Espiner it was time for such a tax.
Prime Minister Christopher Luxon disagreed.
Inland Revenue is also considering the benefits as it consults on the future of the tax system, while Labour leader Chris Hipkins has also discussed the idea.
Willis told Morning Report that she felt New Zealanders "are taxed at a pretty normal level."
Nicola Willis on calls for capital gains tax
"The problem we have had in recent years is our spending as a country has increased out of control. It has been a dramatic increase in spending.
"We just keep spending more and we find new ways to tax people."
Willis said she believes a capital gains tax would detract people from investing.
"If you own a mechanics' business or an interior decorating business and you know that when you go to sell it you will be slapped with a capital gains tax that would be pretty off-putting."
Willis said that spending needs to be reined in, and "you can't tax yourself to prosperity".
Businesses pay tax throughout their lifetime, she said.
"I do want people looking forward to the idea that if they build their business really well, one day they might be able to sell it and retire."
Many economists say too much money has gone toward housing in New Zealand.
Willis said that housing prices have been high, and damaged the economy.
"You have to get to the root cause of that problem, though, which in New Zealand has been extremely restrictive land use laws through the Resource Management Act, very high building costs and disincentives to see housing being built at the level it needs to be to sustain our population.
"Simply sticking on more taxes won't make it easier today for people that can't afford a home."
People who own properties will be still paying charges, taxes and rates, Willis maintained.
Responding to the ANZ's Watson's comments, Willis said she "welcomes political debate".
"I'm simply pointing out that if there are challenges with our economy, which I agree that there are, there are many ways to address it."
Willis said there are "wildly different views" from economists and experts on how a capital gains tax would work or if it is needed.
"Many of them would say you should only do it if you're taking away a tax elsewhere, that's the view of many, many economists. You don't often hear people really pointing out which tax that would be.
"Many people say you should only do it if you're going to do it in a neutral way. Many people say you should only do it if you include the family home. Others say you should only do it if you exclude the family home. Some say that you should do it with a valuation date.
"There is huge disagreement about the complexities and applications of the scheme. And the reality is if you want to have a proposal like this you have to agree on all those things, and then I think that you wouldn't."