Labour plans 39% top tax rate, 15% capital gains tax
The Labour Party confirmed the worst kept non-secret in the country this afternoon when it announced its suite of new taxes.
A capital gains tax of 15% on assets which include property, shares, businesses and farms, accompanied by a new top personal tax rate of 39% kicking in at $150,000.
Labour finance spokesman David Cunliffe justified this last new impost by telling a press conference at Wellington's Westpac Stadium this afternoon that it is still below the Australian top tax rate of 45%.
Mr Cunliffe failed to add the Austalian top tax rate kicks in at $A180,000, or $NZ228,000.
Homes which are partly used for businesses are just one of the targets which will be hit by the Labour Party's new capital gains tax, if and when the party gets a chance to implement it.
A home which has been partly used for a business will have that portion of the house taxed at its capital gain when the house is sold under the policy.
Thus, a house which has had 50% of its floor area used for a business will pay a 15% tax on whatever the capital gain of 50% of the property is.
Existing income tax rules tax the capital gain of people who regularly trade in shares or property at their marginal rate, rather than at 15%.
This group is not going to get a tax cut: rather, the capital gains tax will apply on top of their income tax.
Collectables such as cars or paintings or jewellery are exempt from the capital gains tax. Family baches, however, will be caught by the tax if and when they are sold. Investors in assets which do attract the tax will be able to carry forward losses.
Inheritance of property is not included in the capital gains tax, but any property inherited will be eligible for the tax if and when it is sold.
Assets owned by trusts will be eligible for the tax when any property is sold, and on top of this Labour is promising a review of how trusts are taxed.