While a Capital Gains Tax (CGT) has yet to be mooted by the Tax Working Group, commentators are already saying any CGT would be an extremely tough sell for Labour and is likely to hurt the business sector.
In her post-cabinet press conference on Tuesday, Prime Minister Jacinda Ardern fielded questions regarding a CGT that is expected to be recommended by the Government's Tax Working Group when it reports back this week.
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While Newshub's Political Editor Tova O'Brien admitted to The AM Show that Ms Ardern was "hamstrung" while she awaited the report, she was "certainly defensive" when talking about any potential CGT.
"The Prime Minister kicked off her first post-cabinet press conference, her first big chat to the media back at Parliament, on the defensive, shutting things down, not wanting to talk about things, not wanting to engage, it was not a good start to the year for the Prime Minister," said O'Brien.
"I, for one, had a lot more questions about CGT, there was a lot more we could have asked within the realms of what she could say, but she shut down all of those questions repeatedly and then she just moved the entire press core onto a different topic."
O'Brien said any CGT would be an "incredibly tough sell for Labour", noting the party's tumultuous history with the tax.
Ms Ardern scrapped Labour's capital gains policy a week before the 2017 election in the face of immense criticism and attack ads from National.
The prospect of a capital gains tax was poison at the 2014 election too, derailing then-Labour leader David Cunliffe's campaign.
"It can be sold, other countries have done it, but it is traditionally politically vexed for Labour," said O'Brien, who also noted ministers were beginning to refer to the tax as a Capital Income Tax, an attempt to reframe it for the public along similar lines to any other income tax.
O'Brien said the release of the Tax Working Group's report may give Labour time to sell any proposed CGT, but on the other hand it also opens up a vacuum of discussion about it.
"It means we are going to be talking about this thing that has been political poison for the Labour party traditionally, and the National party will be rubbing its hands together at the prospects," said O'Brien.
Another hurdle Ms Ardern and Finance Minister Grant Robertson may need to overcome is their coalition partner, New Zealand First, who has long rallied against any form of CGT.
"This is going to be a gargantuan battle. Winston Peters has been vehemently opposed to the CGT for as long as I can remember," said O'Brien.
"There are a myriad of quotes of him talking about CGT not working here, not working there."
Former ANZ chief economist Cameron Bagrie also agreed it would hard to sell the tax to the public and doesn't see it being implemented unless it was a "watered down" version with several exemptions.
Mr Bagrie told The AM Show that New Zealand needed a CGT that taxed "wealth creation with the house" and said the family home, which would be excluded from any CGT the Government introduced, should be included.
He said other assets like the car, boat, and even jewellery should be included under the CGT, however, at the same time the Government should also "cut the guts of income taxes" to keep things "fair" and "revenue neutral".
But with politics being involved, Mr Bagrie said things likely wouldn't turn out "fair" and the CGT regime New Zealand would likely end up with would see the business sector hurt as Kiwis are discouraged from investing in businesses to which the CGT would apply.
Newshub.
