Goff says tax policy will give most more money

Wednesday 6th July 2011 7 Comments

Labour leader Phil Goff says his party will give most New Zealanders a tax cut if elected in November.

The party's tax policy will be released next week and NZPA has confirmed that a capital gains tax on investment properties is its centrepiece, raising billions of dollars to pay for its spending promises.

The tax won't affect family homes and will target people with one or more investment properties at a rate of 15 percent on the profit made when they are sold.

The 2006 census data suggested about 200,000 people owned an investment property.

A recent Tax Working Group report indicated a capital gains tax of the sort Labour is proposing would raise more than $4 billion a year.

Labour is also expected to raise the top tax rate, having attacked the Government for months over its tax cuts which gave windfalls to wealthy people.

It has also promised to close tax loopholes which high income earners use to hide their money.

This morning on TV3's Firstline programme Goff did not confirm the policy but spoke generally about tax.

"For most New Zealanders what we are looking at is a policy that has actually cut their tax," he said.

Labour intends to make the first $5000 of income tax free and would remove GST from fresh fruit and vegetables.

"Clearly those things have to be paid for."

Goff said with debt increasing $380 million a week and a deficit of $16.7 billion tax policies had to take that into account.

"At the same time we need to invest in growing our economy, things like research and development and upskilling, if we don't do that we will never get out of the hole that we are in.

"The tax policy has got to provide revenue to do those sorts of things but it's also got to send the right signals about fairness, it's got to send the right signal about encouraging our productive economy, that's really important. The part of the economy that creates jobs."

Goff said home ownership had been plummeting with about 40 percent of New Zealanders unlikely to realise the dream of owning their own place.

The last property boom had pushed up prices and interest rates and played havoc with the exchange rate.

"We can't repeat that sort of mistake again."

While he did not say it a capital gains tax is seen as a measure which could help deflate a new housing bubble.

Prime Minister John Key has always opposed a capital gains tax and yesterday said it was "hideously complicated and people spend their lives with their tax accountants".

Key said people only paid the tax when they sold their assets, so they tended to hang on to them.

Labour is understood to have considered a land tax and a financial transaction tax, and ruled out both.

While details are yet to be confirmed the Real Estate Institute has already reacted telling Radio New Zealand that ordinary people who rely on investment properties to pay for their retirement will be penalised.

The Property Investors Federation told the broadcaster the policy would disadvantage investment property owners, by treating sale proceeds differently to shares, businesses and other assets.

NZPA

Comments from our readers

On 6 July 2011 at 9:37 am BC said:

Looking to buy votes? I'm more concerned with every other policy.

On 6 July 2011 at 10:23 am JP said:

Phillip, Phillip, Phillip, the idea of taking from the so called rich and giving to the welfare dependants, the majority of which will vote for your party if they can be bothered to get off their couch and leave the state funds (via welfare) (and) Sky TV, has never worked. The so called wealthy will just leave NZ and then all those welfare bludgers will be saying borrow more money Phillip to pay for me. My question then is Phillip, where will you get the money? It has all left town. I cannot wait to see how much you are going to spend to buy your votes, and how you are going to pay for this? Taxing more those that earn over a thresh hold of $150,000 will have me and others of my ilk leaving. I will be better off in Australia. And don’t say I am wrong, I have checked this out and even my nephew who is a builder is better off in Australia. I live in NZ for Family, but as most are migrating to Australia, if you are elected Phillip, I will be another leaving.

On 6 July 2011 at 11:29 am Just a Thought said:

Here's a thought, with a $16.7b tax hole how about cutting funding to unproductive sectors which will discourage participation in those sectors (i.e. welfare), and apply addition funding, through tax breaks etc, to productive sectors in order to encourage participation in those (like high income earning business ventures / professions etc). Wouldn't that actually increase the tax take? Just a thought ...

On 6 July 2011 at 5:07 pm JIM said:

Where are the rental houses going to come from if the Labour Govt drives investors out of the market. The Govt cannot meet demand now so is he going to make it worse ????

On 8 July 2011 at 9:53 am jamie p said:

it is our private debt that is likely to make us like Greece. We borrowed to much money from the banks over the last decade. This kept increasing house prices, so we spent it on mainly unproductive sector. The Govt needs to regulate the banks to make it harder for them to get money from overseas, so we end up less indebt overseas. By putting a tax on speculative housing, we will lend less on the non-productive sector and interest will be less, so we will be better off.

On 8 July 2011 at 10:03 am jamie p said:

With the interest rate drop it would mean less speculation with our dollar which would mean the dollar would lower to a historic rate that would mean our exporters would be more competitive.It would mean we would produce more for our home market because imports would be dearer and more money would stay in NZ.

On 15 July 2011 at 8:29 pm Allan said:

The only good thing aboput this stupid tax from a party in self destruct mode is they are not going to get in so we do not have to worry about it. Dumb Phillip real dumb, you will have plenty of time to figure out just how dumb Phillip after the next election which Labour shall lose and you are dumped as leader. Bold decisions are needed yes, not stupid ones like this