Greens co-leader James Shaw says it's time for the Government to adopt a capital gains tax

Green Party co-leader James Shaw says part of the reason why New Zealand has a housing crisis was because there is an absence of a capital gains tax. Photo / Nick Reed

The Green Party has reaffirmed its calls for the adoption of a capital gains tax on the eve of a major tax report being released to the public.

Speaking to the Herald after his commencement speech to Parliament, Greens Co-Leader James Shaw said the Government should adopt a capital gains tax.

"It's patently unfair and it creates all sorts of distortions in the economy and it traps people in poverty to have a system where people who work for a living pay tax on their income and people who flick houses don't."

He said this was part of the reason why New Zealand has a housing crisis.

The adoption of a capital gains tax has been Green Party policy for more than 20 years.

But the party has been less vocal about implementing the tax since it became part of the Government – providing confidence and supply.

In his speech, Shaw said if the Government wanted to reduce the wealth gap and fix the housing crisis – "we need to tax income from capital the same way as we tax income for work".

In other words, he was advocating a capital gains tax.

He also said the last question the Government should be asking itself was "can we be re-elected if we do this" and should ask itself "do we deserve to be re-elected if we don't".

The final Tax Working Group report will be presented to Cabinet next Monday, before being made public later in the week.

It is widely anticipated that the report will contain a recommendation to implement some form of a capital gains tax.

Despite this, Prime Minister Jacinda Ardern has said on multiple occasions that she would not comment on, or advocate for, a capital gains tax before the report had been assessed by ministers.

But such a tax would not come into force until April 2021, after the 2020 election, meaning New Zealanders would have the chance to vote on any decisions made by the Government.

Meanwhile, both National and Act used their commencement speeches to rally against a capital gains tax.

"A National Government that I lead would, among other things, repeal a capital gains tax; [we] would have no new taxes in our first term," National leader Simon Bridges said.

Act Leader David Seymour said that nowhere in the world has a capital gains tax prevented house prices going over 10 times income when supply and demand were mismatched.

"Here's the thing: a capital gains tax is not about helping anybody; it's about dragging people down."