Easy Money

Labour's Capital Gains Tax.

Take me to the action, take me to the track
Take me to a party if they’re bettin’ in the back
I’ve been working all my life, can’t afford to wait
Let me call my wife so I can tell her I’ll be late

Songwriter: Billy Joel.

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The lyrics in today’s song are about gambling —the desire to lay your money down, spin the wheel, and take your chances.

But what if you knew the result?

The house always wins.

That’s the housing market, and over time, we know it’ll end up black, so it’s an easy call, especially with no tax to pay on the winnings. Then others want to spoil the game.

“There’s not enough to pay for all the things we need. You guys need to pay tax on your income, like everyone else does, then we can afford our essentials, and things will be fairer.”

The spectre of the CGT looms…

You know how it goes: the media, the National Party, and all the other vested interests start proclaiming that the sky would fall if we moved to a more progressive tax system that included income from assets, and not just from work. They find the most obscure edge cases and use them to hammer Labour into submission.

A succession of Labour leaders have blinked, unwilling to expend such political capital on policies that will return relatively little in the short term but will be costly, handing the coalition ammunition to attack, even if the vast majority of us wouldn't pay such a tax.

Know when to hold ’em.

With what seems likely to be a very tight election in 2026, you could understand Labour playing it safe, “this time”.

I assumed they would roll back the tax deductions for landlords that the coalition delivered, perhaps extend the “Bright Line” tax that National introduced, but ultimately follow the likes of Jacinda Ardern in ruling out a CGT.

Could you blame them? They want to win the election, the country needs them to do so, so why shoot yourself in the foot by adopting a policy that has been demonised in the public’s minds far more than it warrants?

Besides, where are those disgruntled lefties going to go? The lack of a CGT won’t drive them to the coalition; if anything, it might see some progressive voters move to the Greens, and make Labour more appealing to those in the centre.

Rolling the dice.

So I was surprised to see the following headline this morning:

The Labour Party has voted “near unanimously”, according to RNZ, agreeing on a 28 percent tax on profits from the sale of properties.

No doubt the coalition social media teams are leaping into action to present all the usual objections and scare tactics, but from what I can see, Labour have them covered.

Their policy excludes: The family home, farms, KiwiSaver, shares, business assets, inheritances, and personal items.

It is also non-retrospective and will only include gains made after July 2027.

So on the one hand, Labour is being brave by backing a CGT; on the other, they look to have made it as palatable as possible by excluding the sacred cows—the family home and the farm—and by exempting gains already made.

I take it as a given that Labour’s policy will be attacked, but in my view, this is a principled, albeit cautious, approach that is a start on something long overdue. Most countries have a CGT; those that don’t are generally considered to be tax havens.

Labour Leader Chris Hipkins and Finance and Economy spokesperson Barbara Edmonds, before making the Future Fund announcement on October 20, 2025. (Source: Getty)

Already this morning, economist Brad Olsen, who is typically very National-friendly, has complained that the policy is too small and narrow. In contrast and contradiction, Nicola Willis has demanded that it is too large and far-reaching.

Well, which is it?

Improving the odds.

Of course, some people with multiple properties will still complain, but Labour has also been smart in tying the income from a CGT that affects few to something that benefits many.

Labour hasn’t just said we need to increase the tax intake, which leaves people feeling as if they’re funding a bottomless pit. They’ve been transparent about how the money will be used, and it’s a good choice.

From the NZ Herald:

“Labour has revealed its plan for a targeted capital gains tax, explaining the money would be funnelled back into the health sector and give Kiwis three free doctors’ visits a year.”

Labour leader Chris Hipkins said, “Every dollar raised will go straight into the health system, including funding three free doctor’s visits a year for everyone with a new Medicard. This will save New Zealanders money every year.”

You’d like free doctors’ visits, wouldn’t you?

Of course, you would, and so would everyone. But what about those who were previously exempt but will now be paying tax? Hipkins said 90% of Kiwis won’t pay a CGT, and everyone will get three free doctor visits a year.

Labour health spokesperson Ayesha Verrall said, “One in six New Zealanders cannot afford to visit their doctor when they are sick. Some doctors’ fees are heading towards $100 a visit.”

She continued, “Our plan means that every New Zealander will get a new Medicard that they can use to access three free doctor’s visits each year at their enrolled practice.

This election is make-or-break for our health system. Under a Labour Government, all someone will need to see their doctor is a Medicard, not their credit card.”

All in, or fold?

Labour could’ve gone all in with a more far-reaching Progressive Tax system, or they could’ve chickened out and said, “Now is not the time,” knowing full well that the time never comes.

I’m very pleased that they have shown both courage and caution in their policy settings and linked a CGT to our health service. They cannot control the narrative others will use to attack them, which ignores the fact that most countries already have one, and the sky didn’t fall.

Still, the coalition has the bigger task: convincing Kiwis that someone with multiple properties and untaxed Capital Gains is a higher priority than people being able to afford to see a doctor.

Good luck with that, Christopher, and well done, Chippy - I reckon you got it about right.

Have a good Monday, and take care, all you lovely people.

Ngā mihi,
Nick.

To end today, here’s Mike Delguidice with Billy Joel’s, Easy Money.