Missed opportunity? Questions over Labour’s capital gains tax policy – The Front Page

Labour has announced what some are describing as a “watered-down” version of a capital gains tax.

This targeted 28% tax would affect profit made after July 2027 from selling a commercial or residential property, excluding the family home.

It would also not apply to farms, KiwiSaver, shares, business assets, inheritances and personal items like cars, boats, art and furniture.

In the 2027/28 year, revenue of $100 million is expected, $385m in 2028/29, $965m in 2029/2030 and $1.35 billion in 2030 and outyears.

Labour leader Chris Hipkins promises nine out of 10 Kiwis won’t pay tax on what they own and it’ll allow everyone to get three free doctor visits a year.

On the flipside, National is calling it an “attack on investment and savings”, with Finance Minister Nicola Willis saying it would “put New Zealand’s economic recovery at risk”.

NZ First leader Winston Peters called it “an absolute mess of an announcement” and Act’s David Seymour criticised the policy as a cynical exercise in “political signaling rather than policy”.

Infometrics economist Brad Olsen told The Front Page the general idea with tax policy from an economic point of view is that you want it as broad as possible.

“In my mind, the exemptions that they’ve made with the narrow capital gains tax is very much sort of politics over economics,” Olsen said.

“There is an argument for a capital gains tax at a comprehensive level, and as an economist, that would include the family home, just so that you don’t have this ability for everyone to play games with it.”

All tax revenue collected from the policy would go towards health spending, including funding three free GP visits for every New Zealander by using a “Medicard.”

Labour’s health spokeswoman Dr Ayesha Verrall was confident there were enough doctors in the system to address an increase in GP visits and that the party had a “credible plan” to manage demand, including new artificial intelligence tools.

“The difficulty is [that this looks like a hypothecated tax, that the money coming in from the capital gains tax is ringfenced and can only be spent on that new health proposal,” Olsen said.

“It does seem a bit odd to tie capital gains to health funding.”

Listen to the full episode to hear more about:

• The policy announcement
• Political and economic implications of the policy
• Does it go far enough?

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.

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