THE International Monetary Fund (IMF) has appreciated New Zealand's move to include tax on all vacant land in its tax reforms agenda.

According to IMF's staff appraisal report (SAR) on New Zealand, "Staff welcomes the government's intention to consider adding elements of tax reform, such as a tax on all vacant land, to the agenda. A broad land tax, for example, would support more efficient land use".

Annual SAR, issued on Sep 20, has pitched for granting "temporary tax credits for the construction sector" to induce them adopt new technology for building affordable houses under Government's KiwiBuild program. This incentive could reduce Government's role as developer in the affordable housing program which is lagging. KiwiBuild provides for building 100,000 affordable homes for first-time home buyers over ten years from 2018.

To improve housing affordability, the Government has already extended the period for taxing capital gains on residential investment property from two to five years. It has also changed the tax treatment of residential rental losses, which can only be deducted from future taxable income from rental properties rather than taxable income in general.