Labour has officially announced its capital gains tax policy, with leader Chris Hipkins saying it will make sure those profiting from property pay their fair share.
The current bright-line test which taxes capital gains on properties sold within two years of being purchased would be replaced by the CGT. The bright-line's main-home exemption test would be the same used for the CGT.
Documents show the expected $700m a year across the next four years the tax would gain would be "ring-fenced" for health spending.
"Right now, our tax system rewards property speculation instead of the people creating jobs and growing the economy. We will change that," Hipkins said.
"Our simple, targeted tax changes will make sure those profiting from property pay their fair share, levelling the playing field for Kiwi businesses and innovation."
Hipkins said he thought it would be the "most progressive change to New Zealand's tax system in a generation".
The forecasts showed an initial $100m revenue boost in the first year, rising to $385m in the second year, $965m in the third year, and $1.35b in 2030 - averaging out at $700m a year over the four-year period.
Hipkins making the announcement on Tuesday. Photo: MARK PAPALII / RNZ
Labour released its policy at 5am on Tuesday after details were leaked to RNZ over the long weekend.
Hipkins said there would not be an investigation into who leaked the details, but if it transpired someone in the party had leaked the details they would no longer be a member.
"I'm not going to get into the speculation game," Hipkins said. "If we find out who it is, if they did it deliberately, then they will no longer be a member of the Labour Party."
The party had been debating internally over whether to pursue a wealth tax or a CGT, which RNZ understands won out in a near-unanimous vote by the caucus.
The policy applies a 28 percent tax on the profits from selling properties other than the family home and farms from July 2027.
"For example, if two business partners each own 50 percent of an investment property and it is sold with a net gain of $100,000, each partner pays 28 percent on their $50,000 share," the policy document said.
It would not be retrospective - with the policy documents also clarifying all gains before 1 July 2027 would be excluded.
Labour leader Chris Hipkins with Ayesha Verrall, left, and Barbara Edmonds, right Photo: RNZ / Mark Papalii
"We know that for many New Zealanders, owning a second property has been one of the few reliable ways to get ahead and build security for retirement ... none of the gains that they have made so far will be taxed. What these changes do are set better rules for the future and level the playing field for Kiwi businesses."
The party said "different options" would be available for the valuation on the 1 July switchover date, in line with the recommendations of the Tax Working Group.
The CGT would also not apply when property was transferred between life partners, and the costs of capital improvements would be deducted from sale proceeds - with clear requirements to prove the improvements had been made - when calculating the net gain.
Inheritance would not be treated as a "realisation event", so a family death leading to a transfer of property would not trigger capital gains taxation. In that case, the property would get a valuation at the time of transfer to the executor of the will.
Capital losses - when property sells for less than was paid for it - would be able to be carried forward and used to reduce future capital gains payments.
Hipkins linked the policy back to the "Future Fund" policy announced the previous week.
"Today's targeted tax changes complement that plan by encouraging more investment in home-grown businesses. The choice is clear: keep rewarding speculation and fall further behind or back hard work, innovation and opportunity here at home."
Hipkins said the purpose of the tax was both to take in revenue and change investment behaviour.
"We're not going to get rich as a country by continually buying and selling houses from one another."
He said the CGT was Labour's tax policy and it would not be campaigning on a wealth tax - but stopped short of unequivocally rejecting a wealth tax, which has been proposed by both the Greens and Te Pāti Māori.
"If they can get a majority in Parliament without the Labour Party's support, then of course they can do that," was as far as he would go in ruling it out.
Finance spokesperson Barbara Edmonds said in her opinion a wealth tax would not work unless Australia also implemented one. She said wealth tax projections had also come with estimates of "1 to 4 percent wealth flight, so basically capital leaving New Zealand".
Medicard
The tax policy was paired with a subsidy paying the full cost of three free GP visits for each New Zealander using a "Medicard" to track entitlements and usage - gained at birth or upon gaining residency to citizenship.
In details released by the party later in the morning, the Medicard would hold identity information and would also be available as an app, and integrated with GPs and community health systems - but would also be designed for non-digital users and support multiple languages.
"One in six New Zealanders cannot afford to visit their doctor when they are sick. Some doctors' fees are heading towards $100 a visit," Hipkins said.
"That hasn't happened by accident. It is a direct result of Christopher Luxon's cuts to healthcare and tax breaks for tobacco companies and property speculators."
The documents showed the free GP visits would only be applicable per year and could not be "banked" for future years. It would cover doctor or nurse appointments and would nto include services that were already free like immunisations, ACC visits or after-hours care.
Finance Minister Nicola Willis has slammed the policy. Photo: Samuel Rillstone
Labour would fund additional training and suppport for clinics to introduce new triage systems.
"Using triage will not count towards your three free visits," the documents said.
"The Medicard will integrate with My Health Account, Aotearoa New Zealand's digital health identity system, and through the app you'll be able to access your child's details too.
Labour's Health spokesperson Ayesha Verrall said the policy would cut down on the number of people avoiding going to the doctor because they could not afford it - which ultimately cost the health system more.
"It is a political choice. When people can't afford to see their local doctor or nurse, small issues become big problems, people end up sicker and in hospital - which is stressful and it also costs our health system more in the long run.
"I've met providers offering free treatment out of their own pocket because they know people on Community Services cards can't afford to get their diabetes checked.
"These changes we're announcing today are part of how we move from a system focused on illness to one focused on prevention, keeping people well, freeing up hospital beds, and focusing the health system on health, not just illness."
She said the card would at first be only available to be used at a patient's enrolled GP, but it would be rolled out to other community
All up, the health policies would cost more than $2 billion across the four years.
The clinical triage system costing $30m a year would ensure patients seeking same-day care could get it, and Labour estimated it could free up 1.9 million GP appointments a year, "and streamline a further 2.9 million visits each year".
The documents referred to independent analysis in 2022 showing GPs were underfunded by about 7.6 percent - a $137m funding gap - and pointed to the party's proposal for an Independent Pricing Authority to keep GP costs up to par. The authority was priced at $6m a year.
Tying independent pricing to three taxpayer-funded GP visits a year could prove costly for a prospective Labour government.
The party estimated $323m would be needed in the first year to fund the free doctors visits, rising to $490m annually in subsequent years.
Also included in the documents were promises to provide $5m a year in "targeted funding" for clinics in high-needs areas to ensure they had space in their facilities for seeing patients; and to review the use of telehealth "to make sure funding doesn't pull doctors away from where they're most needed - providing face-to-face care".
The party would also roll out about $5m a year for AI medical scribes and other digital tools to cut down on administrative work.
It would also "support doctors to provide patients with high-quality information to reduce low-complexity visits for those with long-term conditions", freeing up a further estimated 1 million GPs appointments each year at a cost of $5m in the first year, dropping to $3m a year after that.
Finally, GPs would be provided access to the same national catalogue of products used and bought in bulk by Health NZ, which the party said would help with wait times and ensure doctors could use their time more effectively.
Verrall said the costing for the free GP vists was based on the current number of GP visits per year, matched against the average cost paid. She said the party expected its additional policies announced to cut down on GP visits would "manage" the extra demand from offering free visits.
"I think two million extra visits [per year] could be a reasonable estimate, we've got a plan for up to 4.5 million ... we're confident that this plan running over three years will be able to be met within the current workforce, and of course Labour wants to see more GPs trained long-term - and we'll announce that policy later.
"Unless we do this, every other initiative to fix the health system will fail, and that's what's happening under the current government."
Political opponents on the attack
National's Finance Minister Nicola Willis attacked the policy on Morning Report, calling it a "terrible idea" that would put a "massive tax on the New Zealand economy" and disputed the characterisation of the tax as narrow - saying it would apply to all commercial property.
University of Otago professor and tax expert Craig Elliffe, who was on the then-Labour government's tax working group in 2017, said it was narrow and targeted - covering less than similar tax regimes overseas, and was the "cleanest, simplest" form of a CGT that would be straightforward to implement.
ACT has labelled the tax "divisive" and a way of cutting down tall poppies, while New Zealand First says the fact it was leaked will have Hipkins worried and the policy is just a "foot in the door for Greens/Maori Party is they have have to start their negotiations - they will pull it even further down their destructive Marxist wealth distribution pathway".
An RNZ-Reid Research poll last month found 43 percent in support of a CGT on investment properties, with 36 percent against and 22 percent undecided.
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