PM Jacinda Ardern has ruled out implementing a Capital Gains Tax while she is at the helm of Labour

The Prime Minister has shocked New Zealand by ruling out a capital gains tax not just before the next election, but while she is Prime Minister.

She told reporters this afternoon that Cabinet could not reach a consensus and, as such, she scrapped the Tax Working Group's recommendation for a capital gains tax (CGT).

"Under my leadership, we will no longer campaign for, or implement a capital gains tax – not because I don't believe in it, but because I don't believe New Zealand does."

Ardern said the Government simply didn't have the mandate to implement such a tax, as so many Kiwis were against one.

"I have always been clear that we would not be able to proceed unless we were able to form a consensus – that has not happened under this Government."

New Zealand First – which is Labour's coalition partner – is likely to have been against the adoption of a CGT.

In the past, its leader Winston Peters has been dead against such a tax.

In a statement, Peters welcomed the decision – "This decision provides certainty to taxpayers and businesses."

But Ardern was adamant that the NZ First did not bully Labour into not adopting the tax.

Despite today's announcement, Ardern said she thought a CGT would have made a difference.

She said she had campaigned on a CGT because she believes New Zealand's tax system could, and should, be fairer.

"This is just MMP," she said.

Labour has campaigned on implementing a CGT for three elections.

In 2011 and 2014, Labour was rejected by the voters – a GCT was a cornerstone of those election campaigns.

"It's time to accept that not only has a Government that reflects the majority of New Zealanders not been able to find support for this proposal, feedback suggests there is also a lack of mandate amongst New Zealanders for such a tax.

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

The report has cost taxpayers $1.6 million to date and Ardern said the final cost would likely be close to $2 million.

However she said this was not a waste of money because there were still some areas of the TWG report the Government would be looking into.

"The final report covered all aspects of the tax system, and a number of the recommendations will now be considered for inclusion in the Government's Tax Policy Work Programme," Finance Minister Grant Robertson said in a statement.

"That includes exploring options for targeting land speculation and land banking."
More details on that would be announced later, Ardern confirmed.

She also said some areas of the report could help form Labour's 2020 tax policy.

Capital Gains Tax timeline:
2011: The Labour Party, led by Phil Goff, campaigned on implementing a 15 per cent capital gains tax.
2014: The Labour Party, now led now by David Cunliffe, again campaigns on the same CGT policy.
2015: In the May's Budget of this year, then-Prime Minister John Key introduced a bright line test, which required income tax to be paid on any gains from residential property, if sold within two years – a form of a CGT.
2017: The Labour Party campaigned on setting up a Tax Working Group, which would look into a CGT.
2017: In November, the Tax Working Group was set up and Finance Minister Grant Robertson ruled out any capital gains tax on a family home, or the land under it.
2018: In February, the Government extended the bright-line from two, to five years.
2018: In September, the Tax Working Group released its interim report which provided a bit more detail on its thoughts on a CGT.
2019: In February, the group released its final report which included a recommendation for a CGT.
2019: Today, the Government ruled out adopting a CGT – Ardern said one won't be implemented while she's leader.