Why Winston Peters could be the biggest hurdle for a capital gains tax

Deputy Prime Minister Winston Peters has expressed opposition to a capital gains tax in the past. Photo/Getty Images.

Whatever Sir Michael Cullen recommends in his final Tax Working Group report today may be off the table if Labour can't get New Zealand First and Winston Peters' support for it.

Peters has made it clear in the past he is not a fan of a capital gains tax.

Just before the 2017 election, he told TVNZ's Q&A that a capital gains tax was "off the table."

"The two factors are - it doesn't work and the second thing is there is no fairness if you haven't got capital losses as well."

Labour has campaigned on a CGT for the last three elections and the idea has been supported by the Green party for almost 20 years.

But New Zealand First has opposed it in the past.

Peters made it clear in the Newshub ASB Great Finance Debate, also held before the 2017, election that the losses were his sticking point.

"Here is the real issue here. What about capital losses? What if you make a capital loss on your house? Are they going to take that into account? No."

And just to ram home his point he added: "They won't work in this country. They won't work in any other country. They never have worked."

This week he has said New Zealand already has a capital gains tax, referring to the bright line test which means that if an investor sells a property within five years they must pay tax on it.

The Labour-led coalition government has already extended that from the two-year cut off period under the previous government.

The Labour party has said any changes would not come into force until 2021 - after the next general election - making the issue subject to a vote by the people - and an agreement by potential coalition partners.