I’m very pleased to see Labour rule out any increases in income tax rates or GST. The PREFU clearly shows we don’t need to increase taxes to fund extra spending (Labour have pledged to keep spending to under 30% of GDP). So any increase would have been purely punitive, to punish people for being sucessful.
But Labour are still refusing to state whether or not they will introduce a Capital Gains Tax, and are saying that if they decide to do so, they can’t wait until the next election for a mandate. So they are asking for a blank cheque from the public – the right to introduce a Capital Gains Tax, without any public knowledge of the all important details of it.
A CGT can be incredibly complex and the details matter a lot. It is also not something that you can introduce quickly as it requires pretty much every business and family in New Zealand to get their assets valued and assessed so that future capital gains can be taxed.
So even if a decision was taken in late 2018 to introduce a CGT I think realistically you would not implement it until after 2020 anyway – which negates Labour’s claim they need to move urgently on this.
Also the bright line test for capital gains on housing is a de facto CGT already on investment properties.
A Capital Gains Tax that has no exemptions, and is part of a tax swap reducing other taxes is something I would support. But Labour’s last CGT proposal was one which would tax families and businesses an extra $3.7 billion a year. That was based on a 15% tax rate. What if Labour decide after the election it should be a 28% CGT – then you are talking $7 billion a year more in tax.