For many years now, house prices have been increasing fast. If a landlord buys a house for $200,000 then sells it for $300,000 ten years later, this is a profit of $100,000. At the moment, there is no tax on this profit. Under a Labour government, the landlord would pay 15% capital gains tax on the profit. However, if this house is the family home, there is no CGT. It is only if the house is for renting or a holiday house.

　　The reason for a CGT is to help pay New Zealand’s debt. The Labour Party leader, Phil Goff, said that New Zealand pays more than $16bn to repay debt every year. The National Government plans to sell 49% of some state assets such as electricity companies to help pay off this debt. Labour’s idea is a CGT instead.

　　Selling state assets is not popular. Neither is a CGT. Voters will have to choose between two unpopular policies in the elections in November.

　　Listen to January 30 2011 to hear more about selling state assets.

　　Pronunciation

　　Note that debt has a silent “b”.

　　Questions

　　There are many advantages and disadvantages of a CGT. One advantage is that people wanting to invest money, could put this money into business to help the economy. One disadvantage is that landlords might sell their rental properties before a CGT starts on April 1st 2013 and there would be a shortage of rental properties. Can you think of other advantages and disadvantages?