The Labour Party has finally released it's long-anticipated capital gains tax (CGT) policy, and despite the resulting and predictable right-wing backlash, it's a thoroughly researched and measured approach, targeting profits from the sale of residential and commercial investment properties at a flat 28 per cent rate, commencing July 1, 2027, exempting family homes, farms, and inheritances.
The revenue, projected at $385 million in its first full year rising to
$1.35 billion thereafter, would fund a "Medicard" granting every New
Zealander three free GP visits annually. This is no radical upheaval,
but a pragmatic alignment with global norms...a quiet assertion that
untaxed windfalls from non-productive bricks and mortar should shoulder
some burden for the public good.
On Wednesday, 1 News reported:
National has been poised to jump on Labour's long-awaited tax policy and has already pushed out a series of attack ads on social media.
Asked about those ads, Hipkins said he was more than happy to debate Christopher Luxon about his personal finances.
"Bring it on. He sold four houses last year and made more money, tax free, from doing that than he made in the prime minister's salary, which he paid tax on every dollar of.
"Why should he be able to make more than $600,000 in one year from flipping properties whilst the people who go out and work hard every day for a living pay tax on every single dollar that they earn?"
However, as with any whisper of equity in our overheated fiscal debates, the response from the governing coalition has been a cacophony of outrage, a theatrical overreaction befitting a Shakespearean farce. Christopher Luxon, from his perch in Malaysia, decried it as "a tax on every single business in New Zealand," a handbrake on growth that would inflate consumer prices. Finance Minister Nicola Willis echoed the Prime Minister's alarmism, branding it a "terrible idea" that burdens small enterprises. ACT's David Seymour invoked "tall-poppy politics," while New Zealand First dismissed the rollout as a "trainwreck."
The problem for the incumbents is that their fear-mongering, dressed as fiscal prudence, is being laughed out of the room. Their reflexive defence of the status quo where capital accrues to the few while the many scramble for scraps is clearly not supported by the majority of New Zealanders, particularly those who haven't secured a family home yet.
Labour Leader Chris Hipkins rightly countered those who want the housing crisis to get worse by succinctly pointing out that it's "the most progressive tax change in a generation," a simple mechanism to redistribute the fruits of speculation towards healthcare for all.
The right's hysteria ignores a plain truth: New Zealand stands anomalous among OECD peers in shunning a comprehensive CGT. Only Mexico joins us in this outlier status; the rest, from the United Kingdom to Canada and our trans-Tasman kin, levy such taxes on capital gains, often at rates exceeding 20 per cent, without precipitating economic Armageddon. Denmark tops the scale at 42 per cent, Norway close behind at 37.2 per cent, yet their economies hum with innovation and productivity those within New Zealand's current government can only dream of.
These nations prove that taxing unearned gains does not stifle enterprise; it channels investment from speculative housing towards ventures that build lasting wealth and safeguard society from the dysfunction of rampant inequality. In our own backyard, the absence of such a levy has fuelled a property obsession, distorting capital away from productive ends and into the hands of flippers who treat homes as mere commodities. Non of their hoarded wealth trickles down.
Worse still is the National Party's parade of disinformation, a deliberate sleight of hand to obscure the proposal's narrow scope. Luxon and Willis peddled the myth that it ensnares "every business," when Labour's design spares shares, KiwiSaver, and most commercial operations unless tied to property sales. This is not oversight; it is calculated distortion, echoing past disinformation campaigns where National accused opponents of "tax and spend" follies. The truth, as Deloitte's Robyn Walker affirms, is a "sensible middle ground" that mirrors the 2018 Tax Working Group's pragmatic recommendations.
On Tuesday, RNZ reported:
What you need to know: Seven questions about a capital gains tax
The minority view of the report said it agreed there was a strong case for extending taxes to untaxed capital gains.
But it said the comprehensive capital gains tax as proposed in the group's wider final report would outweigh the benefits.
"In our view a comprehensive approach would impose efficiency, compliance and administrative costs that would not be outweighed by the increased revenue, fairness perceptions, and possible integrity benefits of the broader approach. Instead we support a more moderate approach of extending current rules taxing gains, to property categories, only to the extent that benefits clearly exceed costs."
Robyn Walker, tax partner at Deloitte, said Labour's proposal was a sensible middle ground that mirrored that view.
"I think it's a good compromise, I guess, and it means that hopefully we're not like in the weeds on the details of capital gains taxes for the next 12 months, which even as a tax person, I don't want to do that."
The right-wing's fear tactics betray a deeper unease: the proposal unmasks the coalition's own indulgences. Consider Luxon himself, whose property portfolio has been a study in untaxed bounty. Before entering politics, he amassed seven Auckland holdings. Recent sales, a Grey Street, Onehunga unit for a tax-free gain potentially exceeding $250,000, and another Onehunga unit netting $295,000, have swollen his coffers, all shielded from capital levies. His on-paper gains topped $4.34 million last year alone, a sum nearly nine times his parliamentary salary.
Luxon claims transparency, yet his property flips evaded scrutiny under the old bright-line test. This is the man decrying a CGT as a growth-killer, while his government eases the very rules that once curbed such unproductive profiteering.
Under National's watch, the bright-line test, Labour's 2021 extension to 10 years, was slashed to two years from July 1, 2024, allowing quicker flips without tax. Interest deductibility for rentals, phased out by Labour to cool speculation, has been restored: 80 per cent from April 2024, full by 2025. These tweaks supercharge flipping as a "business," rewarding those who treat housing as a casino rather than a human right.
Many coalition MPs ledgers brim with numerous investment property assets. 33 National MPs command a whopping 117 investment properties, making their own personal interest, not the public good, their driving philosophy. National's coalition partners aren't much better. ACT's Parmjeet Parmar for instance lists seven Auckland holdings, making property value increases a paramount driver in all policy development. Scandals abound, from David Seymour lying about his three properties while claiming he couldn't afford one on an MPs salary to numerous National MPs in 2013 shielding rentals in superannuation schemes to recent trust-shuffles, like National MP Carl Bates' 25 properties tucked away pre-election, evading the pecuniary register. Trusts, those opaque veils, largely conceal Member's spousal assets and valuations, rendering parliaments so-called transparency a farce.
Flipping houses shouldn't masquerade as legitimate enterprise in a nation where shelter is a cornerstone of dignity and a requirement for survival. Speculating in property has birthed a deepening crisis: Stats NZ reports homeownership at only 66.0 per cent, with young Kiwis (25-29) at just 44 per cent, down from 61 per cent in 1991. The median multiple (house price to income) hovers at 7.7, "severely unaffordable", with Auckland at around ten times what the average household earns. Median prices linger at $761,000 nationally, $909,000 average value, while rents strain at $635 per week. 51 per cent of Kiwis cite high prices as the paramount barrier, 49 per cent the rental squeeze. Renters, 83 per cent aspiring to own, despair: 62 per cent deem it unattainable. They have given up on the Kiwi dream of owning a house and having a family or will be moving abroad.
A CGT is no panacea, but it is a vital corrective, curbing the frenzy that prices families out and starves public services, an issue compounded by those in positions of power, which is a vital step to safeguarding New Zealand's future. The coalition's propaganda, laced with Luxon's own gains and their asset-hoarding mentality, rings completely hollow. It's time to tax the flippers, not those who aspire to home ownership. Only then might we reclaim a housing market for the many, and not just the vested few.
