Reserve Bank doesn't understand tax system: English
With special feature audio.
Finance Minister Bill English has taken a swipe at the Reserve Bank, saying it doesn't understand the policymaking process and "does not have a detailed understanding of how the tax system or the migration system works."
His comments on The Nation come after a week that saw a speech by Reserve Bank deputy governor Graeme Spencer, which was widely seen as a rebuke to the government – and which also raised questions over whether the bank and the government are waiting for each other to act first.
Saturday's comments by Mr English seem unlikely to ease tensions.
Mr Spencer said the Reserve Bank is looking at introducing more stringent macroprudential tools before the end of the year but that it would be helped if the government chose to revisit the impact tax advantages on residential housing and migration policies are having on the demand side.
"The Reserve Bank's job is to focus on monetary policy and macro-prudential tools. We're always looking at the tax system and immigration, and there's been a number of changes in those areas. The Reserve Bank may not be familiar with those," Mr English says.
He says his government has made recent tax system changes that affect housing, but it hasn't decided to get rid of negative gearing and other issues.
"There's ongoing discussion about the migration settings," Mr English says, adding that "the core issue here is supply –- that you can't actually control the demand in anything other than the very short term, as the Reserve Bank's finding out. The core issue is getting more houses."
In the meantime, Mr Spencer reiterates that the Reserve Bank is looking at new loan-to-value ratio (LVR) restrictions targeting investors and debt-to-income (DTI) limits on mortgage lending, adding that the bank is also considering a housing capital overlay as part of a wider review of lenders' capital requirements.
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Related News
Related News
Reserve Bank doesn't understand tax system: English
59785