Capital gains tax would distort market further, says Reserve Bank

What is more, the Reserve Bank makes it clear, in its submission to the Productivity Commission’s housing productivity inquiry, that it has "never taken a stance on the general merits or otherwise of capital gains taxes."

Labour Party finance spokesman David Cunliffe has, in press releases and speeches boosting his party's capital gains tax, often claimed the Reserve Bank, along with the Treasury and the OECD, all favour a capital gains tax.

The Reserve Bank not only firmly rebutted this claim in its submission but it also, implicitly, criticises the Labour Party plans in this area.

Labour's scheme would exempt owner-occupied houses and would only be collected when an asset - be it a house or other kind of investment - is sold.