Labour Party faithful won't be too upset with the Government's decision to reject a capital gains tax, according to long-time Labour activists and leaders.

Yesterday, Prime Minister Ardern said the Government would not implement a capital gains tax (CGT) as she couldn't get agreement from New Zealand First and she did not have a mandate from New Zealanders.

"In short we have tried to build a mandate, but ultimately have been unsuccessful," she said.

This is despite the fact Labour had been campaigning for a CGT for almost a decade.

Former Labour Party President Mike Williams did not think the wider Labour Party base would be too worried about the CGT rejection.

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"There would be elements of, particularly the unions and the extreme left of the Labour Party, which would be annoyed."

Ardern, he said, would not be harmed from this either.

"She has demonstrated pragmatism and also demonstrated that she is in it for the long term."

In fact, he was not surprised with the Government's decision.

"I have privately been predicting that the whole thing would be abandoned – I didn't think New Zealand First would accept a CGT."

He said in his experience as Labour's President, he doubted that the majority of the Labour Party caucus was "particularly enamoured" by a CGT.

Williams said it would improve both Labour's chances of re-election and would help NZ First stay about the five per cent threshold.

Long-time Labour Party activist, campaigner and, once upon a time a candidate, Shane Te Pou, also thought Ardern's decision would not hurt Labour.

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"I think there was a process and they have listened – I think Jacinda's leadership was very decisive," he told Newstalk ZB.

He said a political party is never going to win an election with a raft of challenging and difficult to understand tax programmes.

He said this was a "purely pragmatic" decision by Ardern.

Many people would have not supported the tax and, come election 2020, "the chickens would have come home to roost" for Labour.

The problem that Labour faced was that the chairman of the Tax Working was "an extremist".

"If anyone needs to take responsibility for putting off what I think is important, a discussion about tax reform, inequality and savings, I think it's Dr Cullen."

He said he had "let the team down badly".

But not all agree.

One Labour Party activist, who did not want to be named, said he was "very, very disappointed" by Ardern's decision.

"Not just in the outcome, but with the fact that Labour seemed to never even try to shift the public's position on a CGT."

He said Ardern said New Zealander's didn't support a capital gains tax – "well I didn't see anything from anyone trying to promote it, apart from Michael Cullen."

He said there would be a lot of other Labour Party members who would be upset with the move.

What's worse, he said, was the fact that Ardern ruled out a CGT while she was Prime Minister.

"That's a kick in the shins for people [Labour members] who had campaigned for years on the need for a CGT."