Labour Party leader Chris Hipkins has reaffirmed that his party intends to introduce only a capital gains tax if elected in New Zealand’s general election on November 7, but he has avoided providing clear answers on whether other tax measures, particularly changes to property taxes, will be implemented. The topic has reignited political debate amid ongoing accusations between Labour and the opposition National Party regarding their respective tax policies.
During a media interview on Wednesday, Hipkins was asked directly whether Labour would commit solely to introducing a capital gains tax without imposing additional taxes. He responded affirmatively but declined to clarify if the party plans to reinstate restrictions on interest deductibility for landlords, a policy that would effectively increase tax obligations for property investors.
Interest deductibility, which allows landlords to deduct mortgage interest costs from their taxable income, has been a contentious issue in New Zealand’s tax landscape. The previous Labour government introduced phased restrictions to this measure starting in 2021. The current administration retained these restrictions, which National and its supporters have criticized as “tax cuts for landlords.” Labour, meanwhile, frames any reversal of these policies as a correction of a National-led tax cut.
When pressed on whether reversing interest deductibility restrictions would constitute a tax increase, Hipkins declined to provide a definitive answer, stating the party would detail its fiscal plans in due course, likely more than a month away. He indicated that Labour may not fully remove the restrictions but could explore a middle ground, such as allowing landlords to deduct only 50 percent of their interest expenses.
The National Party has seized on these ambiguities to accuse Labour of obfuscation. National finance spokeswoman Nicola Willis argued that removing interest deductibility would clearly amount to a tax hike. “If allowing interest deductibility is a tax break, then reversing it is obviously a tax hike,” she said. Willis added that Labour’s reluctance to be transparent on the issue contributes to public distrust regarding the party’s tax intentions.
The exchange comes amid heightened political tensions as the election approaches, with both parties trying to position themselves on economic management and tax policy. Labour emphasizes its commitment to a capital gains tax as a key measure to address housing affordability and inequality, while National warns that Labour’s real agenda may include broader tax increases beyond the capital gains tax.
As of now, Labour’s full fiscal strategy remains forthcoming, leaving voters without a clear picture of whether any additional tax changes will accompany the capital gains tax proposal. The outcome of the election will determine how New Zealand navigates these complex tax policy debates in the coming years.