Labour tax plan to be unveiled tomorrow

Labour leader Phil Goff, finance spokesman David Cunliffe and economic development spokesman David Parker will announce the party's new tax policy tomorrow. Photo / Sarah Ivey

Labour's long-awaited tax policy will be unveiled tomorrow after more than a week of speculation about what it contains and government attacks on it.

Leader Phil Goff, finance spokesman David Cunliffe and economic development spokesman David Parker will announce the policy, expected to be a centrepiece to the party's election campaign, at a function at Wellington's sports stadium at 3pm.

It has been confirmed that the policy will include a capital gains tax on investment properties, including farms and on shares but excluding the family home.

Labour has previously announced plans to scrap income tax on the first $5000 and introduce a new top rate for the highest earners, expected to cut in on income over $120,000, and remove GST from fresh fruit and vegetables.

Mr Goff has refused to comment ahead of the policy announcement, and today only said it would enable the country to pay down debt and would leave 80 percent of New Zealanders better off than before.

"We'll make some hard decisions tomorrow. They'll be bold decisions, they'll be decisions not simply focused on an election in four months' time but what this country needs long term," he said.

"This is not about giving away lollies, this is about easing the pressure on hard-working New Zealanders who pay their share of the tax who got very little back in the way of the tax cuts."

Prime Minister John Key has attacked the plans for a capital gains tax saying it would be "hideously complex" to administer and people would find ways around it.

"They will go through all sorts of hoops not to sell, they'll take out debt against it, they'll transfer the property, they'll do all sorts of things but not sell it," he said.

People would "spend their lives with their tax accountants" avoiding the tax, he said.

Finance Minister Bill English today continued the Government's attack on the policy, saying growing the economy required controlling spending and lowering taxes, rather than big spending and more taxes.

"We think the system is fair at the moment," he told media.

"We've got a small number of higher income taxpayers who pay the lion's share of income tax, everyone contributes a bit through GST. Overall, the system is fair and it's contributing to a growing economy.

"If they want more taxes and more spending, that's not growing to the economy."

Mr English said the current regime meant share traders and property traders effectively paid capital gains.

"Ironically, Labour seem to be proposing to cut the tax on property traders and share traders. It's hard to understand."

- NZPA