Labour on Capital Gains Tax

NZ Herald reports:

Labour leader Phil Goff says his party is prepared to discuss a capital gains tax with the Government, opening the way for an accord on a tax that has long been a political hot potato.

Mr Goff said the party’s bottom line would be that the tax would not apply to family homes.

This means it would effectively target investment properties.

The issue is being considered by a Government tax working group, and neither Prime Minister John Key nor Finance Minister Bill English will rule it out.

A capital gains tax on property investment is seen as one way to reduce the tax advantages of rental housing, curb house price inflation and send investment into productive sectors of the economy.

It is commendable that Labour are not ruling such a tax out, and saying they will judge any proposal on its merits. That will allow the Government to have a sensible consideration of the pros and cons.

My strong expectation is that any revenue from expanding the tax base, should be offset by reductions in existing tax rates. Certainly that is the remit of the Government taskforce looking at the tax system.

I hope Labour’s flexible stance will extend to the merits of a land tax also.