Capital gains tax on Labour's agenda

Labour Party leader Phil Goff is refusing to discuss details of the party's tax policy ahead of its release, but a capital gains tax is on the cards. Photo / Mark Mitchell

Labour will introduce a capital gains tax on investment properties if it wins the election, raising billions of dollars to pay for its spending promises.

The party's tax policy, to be released next week, is still under wraps but NZPA has confirmed a capital gains tax is one of its most important provisions.

It will not affect family homes, which would be political suicide, but will target people with one or more investment properties at a rate of 15 per cent on the profit made when they are sold.

The tax is expected to be capable of raising more than $4 billion a year, but because most people don't own investment properties and those who do are usually wealthy, Labour isn't likely to suffer a voter backlash.

The 2006 census date suggested just more 200,000 people owned investment properties.

Prime Minister John Key has never supported a capital gains tax and repeated his opposition to it today.

"People only pay the tax when they sell so they tend to hold on to their assets," he said.

"It's hideously complex and people spend their life with their tax accountants."

Labour leader Phil Goff today refused to discuss details of the tax policy ahead of its release.

"It's going to be bold, it's going to be about producing a real step change in the economy," he told NZPA.

"I'm not ruling anything in or out at this stage, you'll just have to wait for the announcement."

The party has already announced it will make the first $5000 of income tax free and remove GST from fresh fruit and vegetables.

Next week's announcement is expected to also reveal an increase in the top tax rate, and Labour has persistently accused the Government of favouring the wealthy with its tax cuts.

It has also said it will crack down on tax dodgers by closing loopholes in the law that allow wealthy people to hide their incomes.

The Government has been attacking Labour for months over its policies, saying it hasn't delivered any plan for pay for them.

"They've argued very strongly that they are going to be reducing debt in the same rate that National will over the same time frame," Mr Key said today.

"We know that they're opposed to the mixed ownership model, where the Government is likely to raise in the order of $5-$7 billion, if not a touch more.

"So that is going to be a very heavy tax that they're going to have to apply to all New Zealanders if they really are going to raise that level of income."

Labour is understood to have considered and ruled out a land tax and a financial transactions tax.

- NZPA