Labour's CGT: A Tax on Rising Prices, Not Genuine Wealth

The National Party claims that Labour's Capital Gains Tax will tax inflation rather than genuine wealth gains, according to modelling from the opposition. Campaign Chair Simeon Brown argues that if Kiwis buy a property and sell it after five years with a 3% increase in house prices and 2% inflation, they would face an effective tax rate of 81% on their real capital gain.

Brown says Labour's policy could leave some New Zealanders paying the tax even when they are worse off than when they started. He cites an example where a couple buys an $800,000 rental property and sells it for $927,000, facing a tax bill of $35,600 with an effective rate of 81%.

The modelling also shows that if property prices rise by only 1.5%, a business owner selling their $600,000 property after ten years would face a tax bill of $27,000 despite a real loss of nearly $35,000. Brown calls Labour's Capital Gains Tax 'theft with extra paperwork.'