Labour leader David Cunliffe's Capital Gains Tax is again under fire - this time from economists at the NZIER who say it won't generate anywhere near enough money to cover the party's spending promises.
Labour has over-estimated its capital gains tax numbers, according to a report by the New Zealand Institute of Economic Research. The report was commissioned by Federated Farmers, which strongly opposes the proposal.
Labour predicts a capital gains tax should raise $3.7 billion by 2026. But the Institute claims it'll actually bring in less than half of that.
Mr Cunliffe says the analysis is fundamentally flawed and it's a political stunt.
"No offence to NZIER, but Federated Farmers is playing politics with this report. It was done months ago. They've held onto it till two weeks before the election," he says.
The Capital Gains Tax would be 15%. For example if you buy a business or investment property for $500,000 and later sell it for $600,000, your capital gain would be $100,000. You would pay $15,000, 15%, in capital gains tax.
Labour's plan excludes the family home. But the tax would apply to farmland which the party hopes would raise over $1 billion a year.
The institute claims the Inland Revenue Department would only collect about half of that by 2029. And it also predicts the tax could wipe between $2 billion and $8 billion off farm values.
"There will be lock in, that people will tend to hold on to their assets for longer, won't turn them over. And that's not a good thing for the economy," says William Rolleston, Federated Farmers President.
Labour's flagship tax policy has now become an attack point for its political opponents since Mr Cunliffe floundered on the detail of the Capital Gains Tax during a TV debate last week.
NZIER is standing by its report into the Capital Gains Tax.
Asked if NZIER is a reputable operation, Mr Cunliffe said it is, "and we're disappointed by the quality of this analysis and we've already communicated with them that disappointment".
He says he's "frankly pretty surprised that this sort of report would be written in such politically strong terms with such flimsy analysis".
ONE News deputy political editor Michael Parkin says it seem what Federated Farmers have bought with this report is a fight with the Labour Party.