Labour leader Phil Goff won't rule out tax package that includes capital gains tax excluding the family home

Labour Party leader Phil Goff today would not rule out a tax package that included a capital gains tax on assets excluding the family home, saying Labour had not completed the tax package it would offer to the public in the build up to the November 26 election.

The Green Party is the only party in Parliament to support the introduction of a capital gains tax excluding the family home, pointing to a Tax Working Group report showing such a tax would raise NZ$4.5 billion a year once fully implemented. Prime Minister John Key and Finance Minister Bill English have repeatedly ruled out a capital gains tax, saying it would be too complex to implement.

Both the OECD and IMF have recently recommended a comprehensive capital gains tax to help broaden New Zealand's tax base and act as a disincentive for property investment.

In October 2009, Goff said Labour was prepared to discuss a capital gains tax with the National-led government as long as it did not tax capital gains made on the family home. However, by January this year, Goff had all but ruled a capital gains tax out as an option, saying Labour would rather not allow property investors to write off losses against other income as a disincentive for property investment.

But today he would not be drawn either way on the issue.

“I’m not going to speculate on what we’re looking at at the moment. It just seems to me you’ve got to wait, see the policy, and when the policy’s out you’ll be able to pass judgment," Goff told media at a regular Monday press conference today.

"There’s a whole range of things that we’re looking at, I’m not about speculating about it now, I don’t think it makes sense to do that,” he said.

When quizzed over whether Labour had already ruled out a capital gains tax, Goff replied:

“As I say, we’re going through our policy, we’ll release it in due course and when we release it, you’ll be able to make a judgment about it, but I’m not speculating on it now.”

Labour’s tax policy would be released well before the November 26 election, Goff said.

'Put home ownership back within reach'

Meanwhile the Labour Party would broaden the tax base and work to ensure home ownership was back within the reach of average income earners if elected to government in November, finance spokesman David Cunliffe said.

Cunliffe's comments came in a pre-budget speech he gave to the Manufacturers and Exporters Association in Christchurch on Monday evening.

In the speech attacking the National Party's expected budget plans to be unveiled on Thursday, Cunliffe said Labour would manage down government debt.

"Labour will build a strong export economy with more good jobs. It will do so with an aggressive programme of economic development, innovation and monetary reform that will unleash the potential of the real economy," Cunliffe said.

"Labour will help all Kiwis to own their own future through increased savings and appropriate protection of strategic New Zealand assets. Labour will not strip KiwiSaver but will build on it and broaden it into an even more effective vehicle to lift New Zealand’s crucial savings rate while providing every Kiwi family with the opportunity to secure their future," he said.

Labour would stop the sale of state owned enterprises, prevent the sale of farmland of more than 5ha and ensure the sustainability of New Zealand superannuation by resuming prefunding through contributions to the NZ Superannuation Fund, Cunliffe said.

"And Labour will work to put owning your own home back within reach of average income-earners," he said, although did not say how Labour would look to achieve this.

Broaden tax base

Meanwhile, Cunliffe said Labour would introduce a broader tax base. The party has already announced its intention to raise the top tax rate for income earners with salaries "well into six figures" while targeting tax dodgers and introducing disincentives for property investment.

"Labour will bring down a fair tax package that will ensure a broad and sustainable tax base, and will contribute to aligning the economic incentives with New Zealand’s strategic economic needs. A good Budget would be fair to all – giving every New Zealander a fair go – the opportunity to do better, but also expecting everyone to play their part in the rebuilding of our battered economy," Cunliffe said.

"That includes, frankly, paying a fair share of the tax burden rather than – for some – structuring businesses that do not show income, sheltering income in trusts, or pretending not to trade property after buying and selling a dozen rentals.  Those folks have fair warning that we are all in this together and that they too will pay their fair share," he said.

"Labour will bring to the 2011 general election a responsible, fully-costed policy budget package. We will not be releasing that this Thursday. We need to carefully consider the revised Budget baselines and work them through our own investment plans. We will release our policies systematically once that due diligence has been completed over the next few months."

(Updates with Cunliffe comments)