Unity will be crucial if the Labour Party is to sell yet another version of a policy it has repeatedly failed to convince voters to support. Photo: RNZ / Mark Papalii
Analysis: It was hardly a dream debut for Labour's long-awaited, much-argued-over tax package.
What was meant to be a carefully choreographed reveal of a capital gains tax (CGT) later this week instead arrived early - leaked to RNZ over the long weekend and hastily confirmed by Chris Hipkins this morning.
In his media conference at Parliament, Labour's leader downplayed the premature release, saying the details had been circulated widely and could have come from anywhere.
He delivered a stern warning to any leaker, but also said he was not interested in pursuing any sort of investigation.
That is sensible. History shows such hunts usually end badly. Just ask National about Jami-Lee Ross.
Still, the leak will be of some concern to Hipkins.
The party's internal debate over whether to pursue a wealth tax or CGT has been long and bruising, with strong feelings on both sides.
RNZ understands the caucus vote for a CGT plan was near unanimous - but not quite. And the party's ruling council and policy council were more divided again.
Hipkins needs those proponents of a wealth tax to now fall in behind the selected proposal.
Unity will be crucial if Labour is to sell yet another version of a policy it has repeatedly failed to convince voters to support.
Containing the risk
Labour knows the political peril of talking tax. It's been burned before - in 2011, 2014, and 2017.
This time, the party has chosen the smallest possible target: a cautious CGT applying only to property sales, excluding the family home and farms.
The rate would be set at 28 percent, in line with company tax, and would apply to profits made after 1 July 2027.
National disputes the description of "narrow" but compared to the other options on offer, it meets the definition. This does not cover shares, KiwiSaver, inheritances, or personal assets, like classic cars or artwork.
In many respects, it's little more than an expanded bright-line test - closely resembling the minority view of the 2019 Tax Working Group.
The strategy is clear: keep it simple and sellable.
Labour believes a modest CGT will be more palatable to the public than the more novel and ambitious wealth tax. Capital gains taxes are familiar overseas and no longer as frightening a concept as they once were.
But even the narrowest design can have complications. For example, look to the definition of "family home".
Labour is using the definition used currently by the brightline test which requires a person to be currently living in that house "most of the time".
It means that a person who owns just one house, but lives in a rental property elsewhere, would still be taxed if they sold that property.
Keeping the scope tight also limits revenue.
Labour's own policy paper concedes the returns will be "small relative to GDP and total tax revenue" - roughly $700 million a year.
And almost all of that will go straight into Labour's accompanying health policy.
The sweetener: A 'Medicard' for GP visits
In a bid to soften any political blow, Labour has paired the tax with a tangible benefit - a "Medicard" giving every New Zealander three free GP visits a year.
By tying its CGT to the health system, Labour hopes to frame it not so much as punishment for property owners, but more as a pragmatic way to fund something people actually want.
It's no mistake that the policy touches the two issues named most important by voters in polling: the cost-of-living and healthcare.
Labour has also intentionally made the entitlement universal to ensure the widest possible appeal - even if critics argue the money would be better targeted to those most in need.
Speaking of the critics, government MPs were practically salivating today, having eagerly awaited this announcement as a potential turning point in the polls.
Labour's rise in popularity has come despite having little in the way of a policy platform and the coalition hopes the tide will turn as voters look more sceptically at the alternative.
Finance Minister Nicola Willis branded the proposal a "terrible idea", warning it would hit small businesses that own property.
Act's David Seymour called it divisive "tall-poppy politics", while New Zealand First declared the rollout "a trainwreck".
NZ First's post on social media included a noteworthy kicker, describing the CGT as merely "a foot in the door" for the Greens and Te Pāti Māori.
Hipkins today tried to shut down that attack, claiming that Labour's tax plan would be the next government's tax plan.
But he received no assistance from his purported partners, with the Greens insisting they would not be relinquishing their advocacy for a wealth tax.
Expect more heat on that front as the election approaches.
RNZ's latest Reid Research poll shows the task ahead for Labour: 43 percent in support of a CGT, 36 percent opposed, and 22 percent undecided.
That's not exactly a decisive mandate - but it's not dismal either.
After months of indecision, Labour is finally in the policy game.
This may not be how it had hoped to roll out its flagship policy, but the real test will be how well it can sell it over the coming months.
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