Prime Minister John Key is already peppering Labour’s capital gains tax proposals with political buckshot, even though Labour is yet to formally announce the policy.
The policy though was informally announced on television last night, and all reports say much the same thing: a 15% capital gains tax, with the family home exempt, with the promise this will reap $4.5 billion a year for the government.
Prime Minister John Key told a Wellington business breakfast this morning Labour’s numbers do not add up.
A capital gains tax would need to be levied at 30% to raise the revenue Labour is talking about, he said, and it would also have to be cast much wider than investment properties.
“You could only raise anything like $4.5 billion if you have a 30-% capital gains tax on all farms, on all shares, family baches, and all investment properties.”
Because the tax is typically only levied when the asset is sold, it would take a long time before the government collected much extra revenue.
At 15%, it would be 15 years before the government collected $500 million a year, he said.
“So they’re going to have a $12 billion hold in their first three years [if Labour were elected]” he said.
“We have had two tax reviews in the last decade - the Mcleod Review in 2001 [under the last Labour government] and the Tax Working Group last year, and both of them rejected a capital gains tax for New Zealand,” he said.