The Labour Party caucus has agreed to campaign on a 28% capital gains tax on residential and commercial property, which will be used to fund three visits to a general practitioner doctor for each New Zealander each year.
Opposition leader Chris Hipkins said the policy, which was announced abruptly on Tuesday morning, would help to grow the economy and provide better healthcare.
“Right now our tax system rewards property speculation instead of the people creating jobs and growing the economy. We will change that,” he said.
The National Party’s finance spokesperson Nicola Willis was quick to slam the policy, saying that “Labour’s tax grab” would put New Zealand’s economic recovery at risk. “It’s a tax on savings, investment and growth. The complete opposite of what our economy needs right now.”
But Hipkins said the “simple, targeted tax changes will make sure those profiting from property pay their fair share, levelling the playing field for Kiwi businesses and innovation”.
Every dollar raised by the new tax would be redirected into the healthcare system, Hipkins said, including funding free GP visits through “Medicard” — a physical card and digital system which would be used to track entitlements to subsidised care.
The capital gains tax excludes family homes, farms, KiwiSaver, business assets, inheritance, and other valuables. The capital gains tax is only on investment or second properties.
It would appear to capture a holiday or second home, even if that property was not held specifically for investment purposes. While the tax excludes “business assets” it appears to include any commercial property they may own.
Labour said the tax rate would be 28% to align with the corporate rate, so that property transactions are taxed like other business activities. It would apply at the sale of an asset and be charged on any gains after July 2027.
There’s detailed information on the Labour policies here and here.
This is the statement issued by National:
Labour’s new tax is an attack on investment and savings
Just as New Zealand’s economy gets back on its feet, Labour’s new capital gains tax would hit businesses and Kiwis’ savings, says National’s Finance Spokesperson Nicola Willis.
“Labour’s tax grab would put New Zealand’s economic recovery at risk. It’s a tax on savings, investment and growth. The complete opposite of what our economy needs right now,” says Nicola Willis.
“Labour’s proposed capital gains tax would load more costs on businesses, investors and savers and act as a handbrake on our economy.
“Every business needs somewhere to work from and many businesses depend on some form of commercial property – be it the shop building they own or the premise they work from. 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.
“This is nothing but a tax on the savings and investment our economy desperately needs.
“Many Kiwis’ retirements savings are tied to their small business, rental property or KiwiSaver investments in New Zealand businesses. Taxes on all those things would go up under Labour.
“Kiwis need confidence to invest, hire and plan for the future. This policy would do the opposite. It’s a recipe for fewer jobs, lower incomes and less savings.
“The GP policy is poorly thought out and will simply clog the system as Labour prioritises free GP visits for millionaires, paid for by a tax on people’s savings. It would result in longer doctor wait times for every single Kiwi.
“After a week of shambolic policy announcements, this policy appears to have been rushed out with no detail after someone within Labour leaked it to the media.
“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.”
Additional reporting by David Hargreaves