Labour will campaign on a targeted capital gains tax (CGT) at the next election where profits made from commercial and residential property sales will fund free GP visits for all New Zealanders.
The party was seemingly forced to bring forward the announcement after details were leaked to RNZ.
The party’s leader Chris Hipkins issued a stern warning to the leaker.
“If we find out who it is, if they did it deliberately, then they will no longer be a member of the Labour Party.”
The three governing parties swiftly launched attacks on the leaked elements of the policy, including NZ First leader Winston Peters who called it “an absolute mess of an announcement”.
If elected, Labour’s policy would introduce a 28% tax on profits made after the sale of commercial or residential property, excluding the family home.
The policy, which would come into force from July 1, 2027, would also not apply to farms, KiwiSaver, shares, business assets, inheritances and personal items such as cars, boats, art and furniture.
“I think it will be the most progressive change to NZ’s tax system in a generation,” Hipkins said.
“Moving to a capital gains tax, as many, many other countries are well ahead of us in doing that – the Australians made this decision back in the 1980s, it is time for NZ to take that step.”
The Labour leader said he was “very proud” to be campaigning on the issue.
“It will help us to encourage investment in a productive economy – businesses that create wealth grow jobs and a better future for NZ.
The capital gains policy is expected to raise $700m per year on average. Documents released to journalists this morning stated revenue was expected to be small relative to GDP and total tax revenue.
“Revenue starts low and should generally increase over time.”
In the 2027/28 year, revenue of $100m is expected; $385m in 2028/29; $965m in 2029/2030; and $1.35 billion in 2030.
Labour’s finance and economy spokesperson Barbara Edmonds confirmed those who only owned one home but were unable to live in it, essentially becoming a property speculator, would most likely be taxed under this policy.
Hipkins said the party opted for the CGT as it was “a simple change” and aligned NZ with other countries.
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.”
The card would entitle all New Zealanders to three free visits per year at the practice they were enrolled in. The card, also set to be available as an app, would hold information to identify patients at health services and track their entitlements.
Labour’s health spokesperson 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.
Verrall said some people were now paying almost $100 to see the doctor and one in six New Zealanders avoided seeing a doctor as they could not afford it.
“Medical care should be there when you need it ... but right now, it isn’t.
“When people can’t afford to see their local doctor ... small issues become big problems ... and it also costs our health system more in the long run.”
She said the card guaranteed every New Zealander access to care whether they were “rich or poor, town or country”.
All three coalition Government parties publicly condemned the policy before it was announced by Hipkins at a press conference on Tuesday morning.
National’s finance spokeswoman Nicola Willis claimed the tax would increase costs and stunt economic growth.
“It’s a tax on savings, investment and growth. The complete opposite of what our economy needs right now.”
She also warned using the revenue to fund free GP visits would “clog the system” and provide free doctor appointments for “millionaires”.
Willis affirmed National would not introduce a CGT.
Act leader David Seymour, also acting Prime Minister with Christopher Luxon in Malaysia, criticised the policy as a cynical exercise in “political signalling, rather than policy”.
“The policy would make NZ a nation of tax accountants, not entrepreneurs. The policy won’t raise much revenue, but it will raise a generation of people gaming the system instead of growing the economy,” he said.
“They say it’ll fund free doctor visits, but it wouldn’t. The tax wouldn’t raise a cent until years after its proposed start date. It’s marketing, not policy.”
Peters, speaking from Denmark amid a series of overseas visits as Foreign Minister, doubted the tax would raise enough revenue to pay for free GP visits for everyone.
He also questioned whether it would require compensation if the sale of eligible property ended in a loss.
“It was an absolute mess of an announcement.”
Labour’s tax plan being leaked ahead of its planned announcement is the latest in a string of missteps in the party’s policy release.
Last week, Labour revealed its first policy, a “Future Fund” that would use dividends from some state-owned assets to invest in NZ businesses, which was broadly welcomed but also criticised for a lack of detail.
It also shared the name of a similar policy from NZ First, which Hipkins claimed not to be aware of.
Hipkins was also caught out when part of the party’s health policy was revealed in an opinion piece by Labour’s health spokeswoman Dr Ayesha Verrall published in NZ Doctor. The policy proposed to create an independent authority to set “sustainable prices” for general practices.
Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.