A capital gains tax on property makes little sense unless it also applies to the family home, says Finance Minister Bill English.
Speaking at today's Mood of the Boardroom event in Auckland, English told the country's top business leaders the government was maintaining its "clear position" on the capital gains tax debate.
"We're not supporting the extension of the current capital gains tax," he said.
"The overseas experts who tell us we need it all say that it should be comprehensive on all capital gains. And if you don't do the whole thing then it probably doesn't make much difference."
In the Herald's 2013 Mood of the Boardroom CEOs Survey, just under half of leaders supported the introduction of a capital gains tax in some form.
Also speaking today was David Parker, Labour's finance spokesman, who said the government had backed itself into a corner over its refusal to budge on the matter.
There was a clear need for such a tax, given the "rampant house price inflation in Auckland", but National could not risk getting offside with its voters, Parker said.
"They're allied with the interests of the minority who would pay most of the capital gains tax and whose financial interests it's in to oppose a capital gains tax. They've got themselves in a corner."
Parker said the Labour Party favoured excluding the family home from such a tax.
House prices continued to rise because speculators were buying more and more houses, making a tax free capital gain "at the expense of first home buyers and people who can't even afford one house".
He argued that curbing such speculation would encourage Kiwis to invest in other areas such as the capital markets.
"A capital gains tax would be the most important thing to divert investment capital in other directions," he said.
The Herald's Fran O'Sullivan said this year's Mood of the Boardroom survey showed support was building in the business community for a tax on capital gains.
Thomas Pippos, chief executive of Deloitte New Zealand, said an explicit capital gains tax no longer generated the type of opposition it once did.
"In fact, the majority of those that voted either for or against it saw an explicit capital gains tax as appropriate to set the right policy settings and/or to facilitate a drop in other tax rates."
Pippos recently wrote an opinion piece in the Herald which provoked strong discussion among readers.
He argued there was an acceptance that a capital gains tax was "an inevitable part of our future tax landscape".
Among those who generally supported a capital gains tax, there were ongoing debates as to what it looked like, he said.
"Should the family home be excluded? Should the tax apply on an accruals or a realisation basis? Should it apply at a fixed rate or the taxpayer's marginal tax rate?"
Pippos said New Zealand already had a CGT regime, albeit one that applied only in particular circumstances and which was not comprehensive.
"The most marked exclusions are all domestic equities, non-portfolio investments and large tracts of real property," he said.
"There is no expectation that the continued erosion of the capital boundary will end soon. The only issue is whether it will continue to be slow and concealed or quick and overt."