Full Breakdown
Labour’s Capital Gains Tax Stirs Political Tension Ahead of Election
By Drooid · · How we work
Core Event: Dispute Over the Scope of the New Capital Gains Tax
Labour’s policy, released in October 2023, proposes a capital gains tax (CGT) on gains from the sale of residential properties (excluding the family home) and on commercial buildings. The policy includes a carve-out for small-business owners who sell their premises to purchase a larger one. National Party officials argue that the tax will affect businesses that own commercial property, while Labour maintains that the tax does not apply to the sale of a business itself, only to the property component of such a sale. The disagreement intensified after Labour MP Willie Jackson appeared uncertain about the policy’s details in a televised interview.
Background & Context
The CGT is slated to take effect when commercial or residential property is sold after July 2025. Labour’s platform presents the tax as a “simple, targeted” measure intended to raise revenue without burdening business assets broadly. National has framed the proposal as a hidden tax on businesses and on KiwiSaver-linked investments, contending that many firms own the properties that would become taxable.
Official Statements & Responses
- Prime Minister Chris Hipkins – In a conversation with Jackson, Hipkins said the policy is “very clear” and “very simple,” applying only to residential properties (excluding the family home) and commercial buildings.
- National spokesperson Paul Goldsmith – Repeated the claim that the CGT would “hit” businesses and KiwiSaver funds, labeling Jackson’s responses as “liars” and accusing him of “extensive flailing.”
- Advertising Standards Authority (ASA) – Ruled that a National Party brochure stating the CGT would “hit” small businesses and KiwiSaver was misleading because the ad linked KiwiSaver to the tax without a qualifying explanation.
Criticism & Opposition
National’s criticism focuses on three points: (1) the potential impact on businesses that own commercial property, (2) the alleged effect on KiwiSaver investments, and the perceived confusion generated by Labour MPs such as Jackson. Goldsmith called Jackson “a liar” and suggested the party’s messaging was deliberately vague.
Conflicting Reports & Gaps
- Business impact – Labour asserts the CGT does not tax businesses per se, while National contends that any sale of commercial property by a business will be taxed, effectively burdening the business.
- KiwiSaver effect – Labour’s policy document lists KiwiSaver as an exemption, yet National’s advertising linked the tax to KiwiSaver, prompting the ASA to deem the ad misleading. The ASA decision addresses the advertisement’s wording, not the underlying policy, leaving the factual impact on KiwiSaver unresolved.
Verbatim Quotes
- “The truth is that, according to Labour’s own website, the only exemption from Labour’s capital gains tax is for businesses selling a property to move into a larger one. Every other sale of commercial property will be subject to the capital gains tax.” — Simeon Brown, national campaign chairman
- “I think he was being combative, which Willie can sometimes be. But in doing that, he should have been clearer that our policy is actually very simple.” — Chris Hipkins, zealand prime minister
- “Go jump in the lake, Goldie” — Willie Jackson