"The Standard" on Brash on CGT

An anonymous Guest Post at The Standard is entitled Don Brash: Hypocrite on CGT. They write,

I see Brash has put out a release headlined: “CGT Reactionary, Ruinous, Retrograde and Wrong – Brash”

Is that the same Brash that put out a booklet when he was reserve bank governor, which said:

The absence of a capital gains tax, and the over-taxation of many types of productive investment (largely because of depreciation allowances based on historical cost), together mean that inflation creates a strong bias in favour of real estate investment and against investment in plant and equipment.

Let me add in more of what goes before the piece quoted by The Standard,

On the other hand, the interaction of inflation with the tax system penalises savers. As an illustration, assume inflation is zero and a saver is receiving 5 percent on his or her money. In that case, he or she pays income tax on that 5 percent. However, if inflation is 5 percent, then interest rates have to be 10 percent to ensure the real interest rate, after inflation, remains at 5 percent. Yet in that situation income tax is paid on the full 10 percent, even though the real interest rate has not increased at all. The real return hasn’t changed, but the tax bill has doubled, so the post-tax return has declined significantly. With inflation, this perverse tax effect penalises interest-bearing savings and investments. I strongly suspect that one of the reasons why we are still paying such high real interest rates in New Zealand is that for much of the seventies and eighties the after-tax-and-inflation return on interest-bearing savings was substantially negative. New Zealanders are still very wary of being caught with fixed-interest savings again.

These biases against fixed-interest investment and in favour of borrowing, the absence of a capital gains tax, and the over-taxation of many types of productive investment (largely because of depreciation allowances based on historical cost), together mean that inflation creates a strong bias in favour of real estate investment and against investment in plant and equipment. Regrettably, real estate investment generally contributes little to increasing the economy’s output. (Emphasis highlights the part of the quote used by The Standard)

So the point Brash was making is that in a world of high inflation the lack of a capital gains tax is just one reason that could result in a basis in favour of real estate investment.

But also note this comment from a 1998 Reserve Banks publication The Real Story – saving and investing now that inflation is under control:

On the flip side, because New Zealand does not have a capital gains tax, when inflation was high capital gains were particularly attractive. With inflation now low, capital gains are much reduced. The lack of a capital gains tax no longer matters so much when people are making investment decisions.

So a capital gains tax may have a place when inflation is high but is not an issue when it is low. Thus the obvious response to The Standard is that as we now we are in a low inflation environment a capital gains tax isn't the issue it was when inflation was higher. Thus is Brash really a hypocrite? Or is has just noticed a drop in inflation and changed his view accordingly?