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New Zealand Journal of Forestry (1999) 44(2): 19–23
©New Zealand Institute of Forestry

Research article
Forest tax policy: the cost of bush and forest valuation in New Zealand, or it ain't perfect yet.

E. M. Bilek

An important goal of most tax policy is tax neutrality - that is, that the government usually does not wish to influence market behaviour. However, in its current forestry tax legislation (contained in the Income Tax Amendment Act (No. 3) 1991), the New Zealand government makes it financially less attractive for forest owners to sell immature forests than to sell forests at maturity. Similarly, it is less attractive to acquire immature forests than it is to plant new land. This paper explores and quantifies the anomaly and market distortion, and shows how even buyers and sellers with identical expectations will arrive at differing forest values.
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