Who leaked Labour’s tax?

Radio NZ reports:

Labour has agreed to campaign on a capital gains tax (CGT) covering just property – excluding the family home and farms – to help fund three free doctor visits for everyone.

The policy was announced abruptly on Tuesday morning after RNZ was earlier leaked details over the long weekend.

The fact their tax policy was leaked is in itself significant. In government leaks almost invariably comes from disgruntled public servants. But an opposition policy doesn’t involve the public service. This means it was either leaked by a Labour Party MP, a senior parliamentary staffer or Labour HQ. This is a sure sign that not all is well. Readers will recall National in opposition had a spell of leaking before Chris Luxon became leader. A united caucus doesn’t leak. A disgruntled caucus does.

As to the policy itself, it is typical Labour tax and spend. They promised they’d keep spending to under 30% off GDP, below it out to 34%, and now want more tax and more spending.

The most important thing people should realise about Labour’s CGT is that it will be based on nominal, not real, increases in house values. This means the higher Labour gets inflation to, the more revenue it brings in, and the worse off you will be if subject to it. Here’s an example.

You own a second home worth $1 million. Let’s say inflation is 3% a year. In 10 years you sell that home for $1.3 million. You will be taxed at 28% so pay $84,000 tax.

However that $1.3 million in 10 years is equal to $968,000 in today’s dollars. So in real terms you have lost $34,000 on that house and Labour will tax you $84,000 on top of that $34,000 loss.

I would suggest anyone who has contact with Labour MPs asks them why they are going to tax inflation. They could have made their policy to only tax real gains, not nominal gains. It was a deliberate decision to maximise tax revenue.