The Government today attacked Labour's proposed capital gains tax, saying it could take 15 years to raise revenue and flat or falling house prices would mean little or no gain.
The party's tax policy will be released next week and NZPA has confirmed that a capital gains tax on investment properties is its centrepiece, intended to raise billions of dollars.
The tax won't affect family homes and will target people with one or more investment properties at a rate of 15 per cent on the profit made when they are sold.
Labour leader Phil Goff is refusing to discuss the tax because the policy hasn't been released, and with no details available government ministers played the numbers game on an open field.
"It would probably take 15 years before it raised $700 million," Finance Minister Bill English said in Parliament.
"The other big problem for a capital gains tax is that house prices are flat or falling so it is quite possible that one could bring in the tax and raise nothing."
A 2009 Tax Working Group report estimated a capital gains tax on all forms of investment property would raise $9.1 billion a year and $4.5b if family homes were excluded, but it worked that out on percentage rates higher than Labour intends.
Prime Minister John Key told reporters that to raise $4.5b Labour would have to impose the tax at 30 per cent on rental properties, baches, farms and commercial properties.
"It would have to be every sort of property other than the family home, and I think that's a huge step backwards for New Zealanders," Mr Key said.
"And people only pay it when they sell a property...they go through all sorts of hoops not to sell, they'll take out debt against it, they'll transfer the property, they'll do all sorts of things but not sell it."
Labour is planning to put its capital gains tax up against the Government's revenue-raising plan to partially sell state assets, which it believes is highly unpopular.
"The prime minister knows the economy is in trouble, he knows he has no plan to fix that, selling assets won't do it and the Government's financial statements today show debt went up by another $3b over forecast," Mr Goff said.
"The principles behind our taxation changes are quite clear -- we have to pay down debt, we have to invest in the future by investing in research and development...we need a fairer tax system so that everybody pays their fair share."
Labour has previously announced it would make the first $5000 of income tax free and remove GST from fresh fruit and vegetables.
The Government says its spending promises add up to about $11b.
With Labour MPs silent on the capital gains tax, it was left to the Greens to support it.
Co-leader Russel Norman said the lack of it was a main reason why house prices rose as much as they did between 2001 and 2007, putting them beyond the reach of many young people.
"The same can be said for young New Zealand farmers who are being priced out of owning their own farms due to tax-free speculation in rural property," he said.
"The absence of a comprehensive tax on capital gains, excluding the family home, makes our tax system hugely regressive and unfair."