Targeted tax plan to grow the economy and fund free doctor visits
The Labour Party has unveiled a new targeted tax policy aimed at shifting New Zealand’s economy away from property speculation while generating revenue to fund free healthcare. Under the plan, profits made from selling investment properties and commercial real estate would be taxed, while the family home, farms, KiwiSaver, shares, and business assets remain exempt.
The proposal ends months of speculation over whether Labour would take a capital gains or wealth tax to the 2026 election. The party confirmed that its “targeted capital gains tax” would apply only to profits made on second homes—including baches—and commercial properties sold after July 1, 2027. Gains made before that date would remain untaxed.
The policy marks a significant move by Labour leader Chris Hipkins, who described the plan as a way to ensure “those profiting from property speculation pay their fair share” while giving every New Zealander three free doctor’s visits per year.
“Right now, our tax system rewards property speculation instead of the people creating jobs and growing the economy,” Hipkins said. “We will change that.”
According to Labour, the tax will be set at 28%, matching the company tax rate so that property profits are taxed in line with other business activities. The revenue raised will be ring-fenced for health spending, starting with the introduction of three free general practitioner visits for every New Zealander each year.
Funding free GP visits
To deliver this healthcare benefit, Labour plans to introduce a new Medicard, which will serve as proof of entitlement to free visits. Every New Zealander would receive a Medicard at birth, or upon gaining residency or citizenship. The card will also be available as an app, integrated with existing GP systems, and accessible to non-digital users in multiple languages.
Labour’s Health spokesperson Ayesha Verrall said the policy would directly address the growing cost barriers preventing people from accessing care.
“One in six New Zealanders cannot afford to visit their doctor when they are sick. Some doctors’ fees are heading towards $100 a visit,” Verrall said. “No one should have to choose between seeing a doctor and putting food on the table.”
She blamed the current situation on what she called “Christopher Luxon’s cuts to healthcare and tax breaks for tobacco companies and property speculators,” arguing that the Medicard would restore fairness and accessibility.
“Under a Labour Government, all someone will need to see their doctor is a Medicard—not their credit card,” Verrall added.
What will be taxed—and what won’t
Labour emphasised that the proposed tax is narrowly focused and designed to avoid penalising ordinary New Zealanders. The policy excludes:
- The family home
- Farms and factory equipment
- KiwiSaver, shares, and business assets
- Inheritances, gifts, and personal possessions such as vehicles, art, and furniture.
Only profits made on the sale of commercial or residential investment properties after July 2027 would be taxed. Labour has ruled out both a wealth tax and an inheritance tax, opting instead for this “simple, targeted” model.
Hipkins framed the measure as part of a broader plan to “level the playing field” for small businesses and working families.
“Every dollar raised will go straight into the health system,” he said. “This is part of our plan to grow the economy for Kiwi families and rebuild the health system.”
Critical opposition
Despite Labour’s assurances, critics have labelled the plan a half-measure. The Alliance Party called the proposal a “weak and compromised effort” that fails to address New Zealand’s deep inequality and infrastructure crisis.
Alliance spokesperson Tom Roud said the policy “continues the long snooze of Chris Hipkins” and falls short of the bold reform needed to fund quality public services.
“Labour’s CGT policy will not remotely generate the revenue needed to restore public services or rebuild infrastructure,” Roud said. “It avoids tackling the issue of unproductive wealth.”
The Alliance has called for a comprehensive tax overhaul, including a full capital gains tax, a wealth tax on large inheritances, a land tax (with exemptions for homes and Māori land), and a financial transaction tax to curb speculation. These, Roud argued, would allow the government to cut income taxes for lower earners while ensuring the wealthy contribute more.
“Our current tax system unfairly burdens those who earn wages while leaving untaxed wealth untouched,” he said. “Labour cannot bridge the public services gap with this weak policy.”
‘A step, but too small’ say tax reform advocates
Advocacy group Tax Justice Aotearoa (TJA) and the Better Taxes for a Better Future campaign echoed the Alliance’s concerns, describing the policy as “unambitious” but acknowledging it as a step in the right direction.
Spokesperson Glenn Barclay said the proposed tax is too narrow to deliver the scale of reform needed to make New Zealand’s tax system fair.
“Labour’s policy represents a first step, but it doesn’t yet look like it will deliver the long-term and meaningful change New Zealand needs,” Barclay said.
TJA highlighted research by Inland Revenue in 2023 showing that the wealthiest 311 families in New Zealand had an effective tax rate of just 9.4 percent, compared with over 20 percent for the average New Zealander—a disparity largely due to untaxed capital gains.
“This policy will have only the lightest impact on that discrepancy,” Barclay said. “It will still leave New Zealand as an outlier internationally, since most OECD countries already have a comprehensive capital gains tax.”
While Barclay welcomed the focus on healthcare funding, he said the limited revenue expected from the policy would fall short of addressing wider challenges such as education, climate change, and the costs of an ageing population.
“It’s good to see Labour prioritising GP visits, but we need more comprehensive reform to fund a truly fair and sustainable future,” he said.
The political landscape ahead
Labour’s capital gains proposal sets up a clear policy contrast with Prime Minister Christopher Luxon’s National Party, which has consistently opposed new forms of property or wealth taxation. The policy is expected to be a major election issue in 2026, testing whether New Zealanders are ready to embrace a targeted tax in exchange for tangible health benefits.
For Labour, the pitch is simple: tax property profits, fund healthcare, and build a fairer economy. But critics warn that without broader tax reform, the policy risks being too little to fix New Zealand’s widening wealth gap.
As Hipkins put it, “This is about fairness—ensuring those who profit from speculation contribute to the wellbeing of all New Zealanders.”
Whether voters agree that this balance has been struck may determine not just Labour’s fortunes, but the future direction of New Zealand’s tax and health systems.
SPONSORED
