Labour has committed to campaigning for a capital gains tax (CGT) that applies only to property, excluding the family home and farms, to help finance three free doctor visits for all New Zealanders.
This tax will be set at 28% and will take effect starting in July 2027. It would also not apply to KiwiSaver, shares, business assets, inheritances and personal items like cars, boats, art and furniture.
Labour has linked the tax announcement with a new healthcare plan, demonstrating how the revenue could fund three free GP visits annually for every New Zealander through a “Medicard” programme.
All New Zealanders would be issued a Medicard at birth or upon gaining residency or citizenship, which would be integrated into current GP systems to track their healthcare entitlements and usage.
Labour leader Chris Hipkins said the policy aims to stimulate economic growth and improve 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.
Finance Minister Nicola Willis was quick to slam Labour’s policy of a capital gains tax, saying it would be “a massive tax on the New Zealand economy at a time when it could least afford it.”
“This will put the economy at risk. It’s a terrible idea.”
“They have said it would be a tax on every piece of commercial property in the country. That will hit many, many businesses, from a corner dairy to a manufacturing facility. It will also hit everyone who saved and put money into KiwiSaver, because some businesses in their KiwiSaver will now face a new tax.
“And it will hit every Kiwi who saved hard for a rental property or an investment in a commercial business.”
Willis also pointed out that free GP visits would not solve the underlying problem of a shortage of doctors, which makes getting a consultation difficult.
She said the coalition government is working to increase the number of doctors through training more locally and recruiting from overseas, while also providing targeted subsidies for GP visits for low-income families.
Meanwhile, 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.”
Craig Elliffe, a professor at the University of Otago and tax expert who served on the Labour government’s 2017 Tax Working Group, described the policy as narrow and targeted—covering fewer assets than similar capital gains tax systems overseas. He called it the “cleanest and simplest” form of CGT, which would be easy to implement.
Deputy Prime Minister and ACT leader David Seymour described the tax as “divisive” and a tactic to cut down successful individuals, while New Zealand First expressed concern that the policy leak would worry Hipkins. They claim the policy is a “foot in the door for the Greens/Maori Party, as they have to start their negotiations – they will pull it even further down their destructive Marxist wealth distribution pathway.”