Headline: Capital gains tax debate not over, Grant Robertson suggests

If you buy 1 Property for lets say $1m, which earns say $100k in income..

Now, lets say you hold that for 10 years, and its now worth $2m and returns $150k in income, due to inflation.

Now, lets say you decide to sell this investment for whatever reason,and trade if for an identical $2m property up the road, just because.

You would now have to pay capital gains on $1m profit, of lets say $300k, and be left with $1.7m left to buy this identical $2m property to produce your $150k income, 

You would in effect have to borrow $300k to pay the tax to be left in the exact same position you were before, or buy a cheaper property, which returns a lower income.

You are now far worse off than before, and have gained nothing, in fact the govt is now getting lower tax on the income from the new property, plus would have to give a tax credit for the new borrowing.

NOW, lets say the property market crashes BIG time, and if you had bought this new $2m property, and you can only get $1m for it, the govt will have to give you $300k as a tax credit, as CGT is a two way street.

What a mess.. and its why overseas CGT doesnt actually collect that much in tax, it also makes people NOT sell property, leading to a shortage of supply.

This govt is all about the cronies. 

Just look at the half a dozen ex labour ministers David Clark has hired at massive salaries for DHB jobs.