Even David Parker, the Revenue Minister in charge of the tax when it was implemented, later said the policy perhaps \u201cwent a bit far\u201d<\/a>, saying if the policy were to be reinstated, only up to 50% of interest costs should be banned. <\/p>\n The tax had not been fully rolled out when the coalition repealed it. At the time of the repeal, IRD reiterated that it wanted the tax gone, Treasury changed its tune<\/a> and offered very tepid support to remove the ban, but place a cap on deductions to manage the fiscal cost.<\/p>\n The point is that restoring full deductibility \u2013 the landlord tax cut \u2013 is hardly an unconscionable policy (it may even be good policy), but Labour\u2019s Opposition machine has quite successfully convinced much of the public that it is.<\/p>\n How times change. The mere whisper of a CGT once buried Labour leaders: Phil Goff, David Cunliffe \u2013 nearly Dame Jacinda Ardern herself. Lest we forget, it was Ardern\u2019s decision to overrule Andrew Little\u2019s policy of seeking a mandate for any recommendations from the Tax Working Group in the 2020 election before implementing them that put a stop to her inexorable polling rise in 2017. The problem was so acute she was forced into a quick reversal of direction<\/a> to steady the ship. <\/p>\n So you can see why Chris Hipkins and the Labour hierarchy are somewhat tax-phobic. The polling for CGTs isn\u2019t always bad (it\u2019s not often good either). The electoral record is somewhat different. That said, the political mood appears to have shifted. The unpopularity of the Government\u2019s interest deductibility changes hints at a changing of the political temperature. Property investment isn\u2019t the sacred cow it used to be \u2013 it may in fact be a sacred cow overdue for slaughter. <\/p>\n One of the surprising things this week has been the flat-footed response to the tax from the Government. They\u2019ve known since the end of 2023 that Hipkins was considering putting a CGT back on the table<\/a>, they\u2019ve known since Labour\u2019s conference in November last year that a CGT was likely, and they\u2019ve known since September that a property-only CGT was likely, thanks to reports in the Herald<\/a>.<\/p>\n This policy should have been quite unsurprising \u2013 and the Opposition should have been ready to eviscerate it. <\/p>\n And yet, despite all that, we\u2019ve heard very little from them. <\/p>\n Finance Minister Nicola Willis warned about the tax\u2019s effects on the economy. An interesting attack, but one that is hard to substantiate, given the tax\u2019s limited scope and revenue potential. She noted that people who bought a new house but didn\u2019t want to sell their old house would be captured by the tax\u2026 certainly an issue for people who cannot sell their current homes thanks to the nationwide housing crash, but not one that\u2019s likely to resonate with a broad swathe of voters.<\/p>\n Compliance costs for landlords are certainly a problem, but not one that\u2019s likely to shift the capricious needle of public opinion in the Nats\u2019 favour. <\/p>\n The Prime Minister was asked about the tax on his Asian tour. Literally his first words in response were: \u201cLook, I just say to you \u2026 \u201d <\/p>\n The rest probably doesn\u2019t matter. Voters sick of his pre-programmed responses had turned off.<\/p>\n The best anti-tax argument from the coalition came from Building and Construction Minister Chris Penk, who noted some Defence Force personnel, who only owned one home, could be hit by the tax if they needed to move out during an overseas posting (Ministry of Foreign Affairs and Trade diplomats face the same dilemma). <\/p>\n It\u2019s a big issue, particularly as Labour\u2019s decision to start the \u201cgains\u201d clock in 2027 in the midst of a property downturn means there will be some people who will incur a large paper \u201cgain\u201d and therefore tax liability despite the fact that they have sold their property for much less than they bought it for.<\/p>\n