It wouldn't be an election year without the bogeymen. Don Brash's favourite (Maori Who Have Too Many Rights) is trying to make another desperate comeback to revive Act's flaccid poll performance.

National's is the evil Capital Gains Tax (CGT).

Since journalists got a sniff of Labour's yet to be announced tax policy, National has spared no emotive, doom-laden expression to scare us off.

A capital gains tax would suck out our brains and end civilisation as we know it. It would be "economic vandalism" (Steven Joyce). It would "crush everyday New Zealanders" and send us "screaming backwards" (John Key).

Oh, the horror!

Tax talk makes most people's eyes water, so it's a safe bet that hysterical scaremongering will leave an impression that reasoned argument will not.

The idea of a capital gains tax equating to political suicide is burned so deeply into the risk-averse brains of our politicians that it has taken the prospect of annihilation in November to push Labour this far.

But, trailing in National's dust, and running out of time and options, the capital gains tax may just be the Hail Mary pass that turns the game in Labour's favour.

What may be worrying National is that the once unthinkable is not quite as left field as it's been trying to make out.

The IMF, the OECD, Treasury, the Reserve Bank, and, inconveniently for the Government, a growing number of business people including the Exporters and Manufacturers Association, and the Productive Economy Council (PEC), have all made the case for a capital gains tax.

Even the Tax Working Group has acknowledged the "major hole in the tax base concerning the taxation of capital, which is manifest in high investment and low returns for the property market".

And the Government's own Savings Working Group has also pointed out that 50 per cent of our housing bubble (larger than bubbles in the US, Australia and the UK) was due to the lack of a capital gains tax.

So far opponents have been mostly self-serving. "It's not in the Kiwi psyche to tax our assets," claimed Bruce Wills, Federated Farmers president.

Yes, rents may rise, but most people will see the departure of speculators from the property market as a good thing, making houses more affordable for first-home buyers.

On Morning Report last week, Sydney Morning Herald economics correspondent Peter Martin said Australians on both sides of the political divide regard our lack of a capital gains tax as "a case study in strangeness".

"There's a yawning gap in New Zealand's tax system, which isn't there in the US tax system, isn't there in the Australian tax system."

While the mere suggestion that we should tax all income equally, regardless of source, is treated as outrageous, Australians seem to have no problem with the apparently radical idea that "if you earn a buck, you've earned a buck", and whether it's from flipping burgers or selling shares at a profit, "you're taxed on that at your marginal tax rate".

What we regard as too complex and unworkable for our poor little economy seems to be working just fine across the ditch. Exemptions there include the family home, assets acquired before the tax was introduced, most cars and motorcycles, "personal use assets" worth up to A$10,000 including boats, furniture and electrical equipment.

We won't know until Thursday exactly how Labour's capital gains tax will be configured, but the indications are it will be comprehensive, and include income earned from the sale of shares and farms.

For Auckland millionaire businessman Selwyn Pellett, a capital gains tax is a no-brainer, a critical step towards "rebalancing the economy in favour of exports and jobs".

The technology entrepreneur says he's one of a large group of business people who support a capital gains tax, either because they're "nation-builders" driven by a sense of social responsibility, or because they're exporters and manufacturers who've watched our limited investment dollars being sucked up by the property market.

Pellett sees a capital gains tax as part of an economic strategy that addresses job creation, sustainability, and fairness. It's "blatantly wrong", he says, that "people like me can live off capital ... I can use all the resources of the country, but if I choose to, I have the financial flexibility to never pay income tax".

Like Trade Me founder Sam Morgan, who didn't have to pay tax on the millions he made from its sale, Pellett tells me he made around $8 million in the last few years from sales of shares in a company he founded, and paid "zero tax" on that income.

"I think that's grossly unfair. So the debate is bigger than just secondary houses. It's about the fairness of our society. We need to have a tax system that rewards investment in productive, job creating, deficit-removing activities and discourages investment in unproductive, job destroying, deficit-creating activities. We currently have it all the wrong way around."