Labour leader Chris Hipkins says the party's capital gains tax policy would set "better rules for the future" while providing three free GP visits for all New Zealanders and supporting the health system.
Announced this morning, Labour said if elected at next year's election it would introduce a set 28% capital gains tax on commercial and residential property, excluding key assets such as the family home, farms, KiwiSaver, shares, business assets, inheritances, and personal items.
The revenue would be partly used to fund three free doctor's visits, and any leftover funds would be ring-fenced for healthcare.
What you need to know as Labour announces capital gains tax policy - Watch on TVNZ+
Profits from selling some properties will be taxed to fund healthcare, Hipkins says. (Source: 1News)
The tax, if implemented, would take effect from July 1, 2027 and would not be applied retrospectively.
Prime Minister Christopher Luxon, speaking from the East Asia Summit in Malaysia, called the Labour policy "uncooked".
Policy documents released by Labour this morning said revenue would be low to start with, but "should generally increase over time".
On average, the capital gains tax was expected to raise around $700 million each year over the forecast period while the announced health policies were forecast to cost about $550 million a year.
The three governing parties have launched attacks on Labour's tax policy, labelling it a "handbrake on our economy", "tall poppy" politics and an "absolute mess".
Speaking to media this morning from Parliament, Hipkins said the party opted for a capital gains tax because it was a "simple change" which would align New Zealand with countries around the world.
"Let me be clear – the tax would only apply to commercial and residential properties excluding the family home," he said about the party's targeted capital gains tax.
"Every dollar raised will go into funding our health system."
Hipkins said the tax system currently rewarded property speculation instead of the people creating jobs and growing the economy.
"Our simple, targeted tax changes will make sure those profiting from property pay their fair share, levelling the playing field for Kiwi businesses and innovation."
Labour's health spokesperson Ayesha Verrall said some people were paying almost $100 to see their GP.
"Medical care should be there when you need it ... but right now, it isn't. Our plan means that every New Zealander will get a new Medicard that they can use to access three free doctor’s visits each year at their enrolled practice."
She said strong, accessible primary care was a feature of successful health systems across the world.
"It is often said that $1 spent in primary care saves 10 in our hospitals, so by making it easier to see a doctor or a nurse, we'll save hospitals for those who really need them."
The policy was abruptly announced on Tuesday morning after RNZ was leaked details over the long weekend.
Asked about the leaking of the policy, Hipkins said he was unsure how some of the details came to be in the public domain this morning.
"If we find out who it is, if they did it deliberately, then they will no longer be a member of the Labour Party."
'More taxing isn't the way forward' – Luxon
Prime Minister Christopher Luxon branded Labour's capital gains tax plan "very uncooked".
"This is a tax on every single business in New Zealand. Think about that corner dairy owner that actually has to operate from premises in a building that's going to get taxed, that ends up adding cost to that business owner, that ends up putting our cost out to the consumer," he told reporters from Kuala Lumpur, Malaysia.
"Taxing our way out of out of the mess that we've been in that Labour gave us – more spending, more borrowing, more taxing – isn't the way forward. That's what created the mess."
He continued: "Labour used to be for working people. They didn't support tax cuts for working New Zealanders, and now they want to load up more taxes on businesses. Last week, they want to do something else and take $800 million out of the health care system. So, I mean, like it's all over the shop, right? It's very uncooked."
Luxon added that Labour's promise to introduce a set 28% capital gains tax on commercial and residential property wasn't the solution to improving Kiwis' living standards.
"We need to get New Zealand on a really strong growth track, and that's the way that we get people wealthier. And when you look at why other countries are wealthier than New Zealand, it comes down to five things: world-class education system; more embracing of technology and innovation; get[ting] rid of red tape; modern, reliable infrastructure; and trade and investment.
"It doesn't matter which country you study and look at – those are the five things that lift the collective living standards. And that's what we have to do in New Zealand because, for the last 30 years, we've worked incredibly hard, but we haven't been able to lift our collective living standards. We haven't addressed fundamentally those five issues."
The world leader pointed to Hipkins' shifting stance on a capital gains tax over the years.
"He is Mr Flip Flop. It is all over the place. So, you know, frankly, I don't really put too much store on what he says about taxes.
"All I can tell you is, [it] doesn't matter whether it's Labour, Greens, Te Pāti Māori – they want to tax more, they want to borrow more, they want to spend more.
"That's what got us into this ungodly mess, and that's what we're working hard to get us out of."
Coalition parties, Greens slam Labour's capital gains tax plan
National's Nicola Willis described Labour's policy as "an attack on investment and savings" which would put the country's economic recovery at risk.
"Labour’s proposed capital gains tax would load more costs on businesses, investors and savers and act as a handbrake on our economy.
"By levelling a new tax on land and buildings, Labour has effectively committed to a tax on businesses small and large - from the corner dairy to the local factory."
Willis also criticised the GP policy as "poorly thought out", saying it would clog the system with "free GP visits for millionaires, paid for by a tax on people’s savings".
"National will not introduce a capital gains tax. We are working hard to rebuild New Zealand’s economy with less red tape for businesses and more investment."
ACT leader David Seymour criticised Labour’s proposed capital assets tax, saying it would push New Zealand’s already high tax burden even higher.
Seymour dismissed the idea that the capital gains tax was linked to doctors' visits as "marketing" because the tax would not generate revenue for years.
"If they won the election they’d want to deliver the free doctor visits straight away, but it couldn’t be funded by the Capital Gains Tax."
One tax expert called it ‘capital gains tax lite’ while a business leader says it won’t make much money. (Source: 1News)
Seymour also warned against scapegoating asset owners, saying Labour was tapping into the "same tall poppy spirit".
"Fair is fair and people should pay their taxes, but we already pay more than most. Another tax is not the solution to our problems."
New Zealand First leader Winston Peters told the Herald he 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," he said.
Green Party co-leader and finance spokesperson Chlöe Swarbrick said the "watered down" announcement fell "far short of meeting the needs of New Zealanders".
"Right now, the wealthiest pay half the effective tax rate of our nurses, teachers and firefighters. Labour’s announcement doesn’t even try to fix that," she said in a statement.
“In a year, the richest family in this country can make more money in their sleep, without lifting a finger, than Labour’s proposed CGT would generate.
"That's not only grossly unfair. It robs us of the resource necessary for the working healthcare and education and infrastructure that New Zealanders deserve."
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