Neil Sands
Labour will take a 28% capital gains tax to next year’s election, saying the “targeted” measure is needed to reform a tax system that rewards property speculation over economic growth.
Labour rushed out the flagship policy announcement on Tuesday morning when details were leaked to media, after previously saying it would be unveiled later this year or in early 2026.
Under the policy, capital gains made after 1 July 2027 on a commercial property or residential property (excluding the family home) will be taxed at 28%, to match the company tax rate.
“Right now, our tax system rewards property speculation instead of the people creating jobs and growing the economy. We will change that,” Labour leader Chris Hipkins said. “Our simple, targeted tax changes will make sure those profiting from property pay their fair share, leveling the playing field for Kiwi businesses and innovation.”
As a trade off, Labour says it will ringfence funds raised by the tax for the health system, paying for three GP visits a year for all New Zealanders.
Hipkins did not detail how much revenue the tax was expected to generate but said nine out of 10 New Zealanders won’t pay tax on the property they own.
He said the family home, farms, KiwiSaver, shares, business assets, inheritances and personal items would be exempt.
Economic handbrake
Finance Minister Nicola Willis said the capital gains tax would be “a handbrake on the economy”.
“This is nothing but a tax on the savings and investment our economy desperately needs,” she said. “Many Kiwis’ retirements savings are tied to their small business, rental property or KiwiSaver investments in New Zealand businesses. Taxes on all those things would go up under Labour.”
Willis said many New Zealanders also depend on some form of commercial property. By imposing a new tax on land and buildings, Labour has effectively committed to a tax on businesses, large and small – from the corner dairy to a local factory.
“Kiwis need the confidence to invest and have a plan for the future. This policy would do the opposite. It’s a recipe for fewer jobs, lower incomes and less savings.
Labour destroyed the economy the last time it was in government, Willis said, “and they will do it again if given the chance”.
Scare tactics
Labour is certain to face a scare campaign on the tax in the lead up to the next election, which is due in the final quarter of 2026.
Campaigning on a new tax is notoriously difficult, which is why Hipkins ruled out a capital gains tax in the 2023 election and Jacinda Ardern also put it in the too hard basket.
“After almost a decade campaigning on it… we have been unable to build a mandate for a capital gains tax,” Ardern said in 2019.
“While I have believed in a CGT, it’s clear many New Zealanders do not. That is why I am also ruling out a capital gains tax under my leadership in the future.”
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