Labour banks on voters 'doing right thing'

Phil Goff. Photo / Mark Mitchell

Labour has staked its election chances on an appeal to New Zealanders to "do the right thing" by accepting new taxes as the right economic medicine and to fund "a fair go" for struggling families.

In a slick launch at Wellington's Westpac Stadium yesterday fronted by leader Phil Goff, his finance spokesmen David Cunliffe and David Parker, Labour finally spoke openly about the well flagged "tax switch" policy it will campaign on for November's election.

Should it win, Labour would bring in a broad-based 15 per cent tax on capital gains and reintroduce a top tax rate of 39c in the dollar for income over $150,000 a year.

Those policies would fund its previously announced plans to remove GST from fruit and vegetables and to make the first $5000 of income tax free, with cash left over to pay down debt as quickly as National without selling off state-owned assets.

As revealed by the Herald yesterday, the capital gains tax plan includes partial exemptions for small business owners and for property owners hit by the Canterbury earthquakes as well as an exemption for the family home.

Falling mainly on investment properties, farms and businesses, the tax would raise about $2.3 billion annually after 10 years, Labour estimates.

Backed by what Labour said were conservative forecasts, Mr Goff pitched the whole package as a credible alternative to National's asset sales plan, as a dose of much-needed medicine for the economy and as a rebalancing of the tax system "so that everyone pays their fair share".

With relatively few New Zealanders subject to the capital gain tax and the removal of tax on the first $5000 earned, "the overwhelming majority of Kiwis will end up paying less tax not more".

But while he said his plan was seen as sound even by some investment property owners and businessmen who would lose out, he acknowledged it would not be welcomed by everyone.

"These changes won't be easy and some people won't like them. But it's the right thing to do," he said.

"We are fighting for the future of the country, it's that simple. It's time to show courage and take action."

The plan has been panned by Prime Minister John Key and his Government as anti-growth and by some experts including IRD as too complex.

But it has found support from other experts and Treasury.

Mr Goff said it would mean more debt in the near term but said that would be more than made up for later.