The Government is accusing Labour of a "hodge-podge tax grab" to pay for its spending promises, and says the proposed capital gains tax (CGT) would raise virtually nothing in the first few years.

"Labour has clearly learned nothing from its failed policies of the past," said Finance Minister Bill English.

"Having left New Zealand with forecasts of ever-rising debt and permanent deficits when he was kicked out of office in 2008, Phil Goff now wants to go back and do the same all over again."

Mr Goff, Labour's leader, launched the party's economic policy today with its centrepiece the broad-based CGT at 15 percent and a new top tax rate of 39 percent on income over $150,000.

Labour accepts that a CGT would start slowly but says it would raise $26 billion over 15 years which would be used to repay debt.

Mr English said the economy was gathering momentum and growing faster than expected.

"More taxes and more debt under Labour would put that at risk," he said.

United Future leader Peter Dunne, who is Minister of Revenue and responsible for tax law, said Labour's package was "little more than a massive attack on personal achievement and success".

"This has nothing to do with good policy or sound economics," he said.

"It has everything to do with satisfying entrenched envy within the Labour left, and seeking to stop Labour haemorrhaging its core voters to the Greens."

The Green Party supported the tax package and said it would help the economy.

"Labour has had the courage to recognise and implement good tax policy and we congratulate them for that," said co-leader Russel Norman.

"A comprehensive tax on capital gains, excluding the family home, is a critical component of rebalancing our economy."

The Council of Trade Unions (CTU) also backed the policy, saying it was more fair than the current system.

"This is a carefully considered and responsible policy framework," said CTU secretary Peter Conway.

"It will be good for the Government's accounts and also good for the economy."

BusinessNZ chief executive Phil O'Reilly said the top tax rate hike would be an incentive for people to leave New Zealand.

"This would erode the tax base rather than building it up - five percent of New Zealanders pay around a third of all income tax and bumping up their tax risks reducing their ranks further and making New Zealand poorer," he said.

"A capital gains tax, with all the proposed exemptions, wouldn't raise much revenue."

Federated Farmers said it was difficult to see how a CGT would help the economy.

"We talk much about building an entrepreneurial culture in New Zealand, but to do that risk takers need to be rewarded for the risks they take," the organisation's president Bruce Wills said.

"Our lack of a capital gains tax and reasonable personal and company tax rates are all positives when attracting people, ideas and much-needed capital to our shores."

Michael Barnett, chief executive of the Auckland Chamber of Commerce, said another tax was not a plan for growth.

"Just unveiling yet another tax - half of which will be directed to offset taxes of low income earners - doesn't seem to be plan for getting investment into the productive side of the economy. It is disappointing that once again our politicians are letting the side down."

- NZPA, HERALD ONLINE