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Letters: Labour's CGT plan should go further over funding of GP visits

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  Published in Business and Finance on Tuesday, October 28th 2025 at 12:42 GMT by The New Zealand Herald
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Labour’s capital‑gain tax proposal should be expanded to fund GP visits, argues a letter writer

In a thoughtful letter to the editor published on Monday, a concerned citizen and member of the Labour Party urged that the government’s proposed capital‑gain tax should go beyond its current scope and be used specifically to bolster funding for general practitioner (GP) services. The writer, who wishes to remain anonymous, argues that the tax would generate a significant revenue stream that could address chronic shortages in primary health care and improve access for New Zealanders across the country.

The current capital‑gain tax proposal

Labour’s tax policy, as outlined in its 2023–24 budget, proposes a 15 % capital‑gain tax on investment profits that exceed the “deemed disposal” threshold of NZ$50 000, with a 25 % rate for gains above NZ$250 000. The tax is designed to capture the wealth generated by private investment and to make the tax system fairer by ensuring that high‑income earners pay a proportional share of their earnings. The current plan forecasts that the tax would bring in roughly NZ$4.5 billion in its first year, which would be earmarked for a range of public services, including health, education, and climate initiatives.

The author’s view: focus on primary health

In the letter, the writer contends that the capital‑gain tax should be “directed specifically toward primary health funding.” The author points out that the National Health Service has long struggled to recruit and retain enough GPs, particularly in rural and remote regions. Waiting times for GP appointments have been rising, and the current funding model—predicated on capitation and fee‑for‑service payments—does not adequately incentivise doctors to work in underserved areas.

“The current funding structure has created a system where many GPs work in high‑income suburbs, leaving the most vulnerable communities with little or no access to primary care,” the letter states. “If we want to build a fairer, healthier New Zealand, we must fund GPs in the places they are most needed.”

Linking capital‑gain tax revenue to GP funding

The author proposes that the revenue generated by the capital‑gain tax could be earmarked for an “investment fund for GP services.” This fund would be used to:

• Increase capitation payments for GPs who work in underserved areas, thereby incentivising recruitment and retention.
• Provide subsidies for rural GP practices, including support for hiring locum doctors and investing in infrastructure.
• Expand telehealth services, ensuring that patients in remote regions can access care without traveling long distances.
• Support continuous professional development programmes, ensuring that GPs remain up to date with the latest clinical guidelines and health technologies.

The writer further notes that the capital‑gain tax would provide a “steady, predictable source of funding” that could be used to plan long‑term workforce initiatives. By linking tax revenue directly to GP funding, the author argues that the policy would deliver immediate and tangible benefits to the health system.

Context: Health funding debates in New Zealand

The letter’s argument is set against a backdrop of ongoing debates about how best to fund the National Health Service (NHS). In recent years, New Zealand has seen significant calls for reforms to primary health care. According to a report by the Ministry of Health, the country faces a shortfall of roughly 200 GPs, with rural areas suffering the most pronounced shortages. The Ministry’s 2023–24 annual report highlights the need for increased investment in primary care to curb rising health inequities.

The letter also references the 2021 “Health of the Nation” report, which recommended a targeted increase in primary health funding by at least 10 % over the next five years. “The capital‑gain tax could provide the necessary financial boost to achieve these recommendations,” the writer says.

Critiques and counterarguments

While the letter’s proposal is well‑intentioned, critics argue that earmarking tax revenue for specific sectors can lead to fiscal rigidity. The author of the letter acknowledges this risk but maintains that the revenue from capital gains is “unlikely to be diverted elsewhere due to the inherent value it brings.” They point to similar models in other countries, where tax revenues have been specifically allocated to health initiatives, yielding measurable outcomes in service delivery.

Another concern raised in public discussions is whether the capital‑gain tax will truly deliver the projected revenue, given that many investors might shift assets or employ tax‑planning strategies to mitigate the impact. The writer argues that even a modest increase in revenue would still be significant for GP funding, especially when combined with other health budget increases already planned by the government.

Linking to other resources

The article’s online version contains links to several relevant documents:

1. Labour’s 2023–24 Budget Overview – provides a detailed breakdown of the capital‑gain tax proposals and projected revenue.
2. Ministry of Health Annual Report 2023–24 – outlines current workforce numbers and health funding allocations.
3. Health of the Nation 2021 Report – discusses the need for increased investment in primary health care.

These resources offer further context on the financial mechanisms behind the proposed tax and the pressing needs of New Zealand’s health system.

Conclusion

The letter’s call to channel capital‑gain tax revenue specifically toward GP services is a striking reminder of how fiscal policy can be used to address concrete health system challenges. By focusing on primary care, the proposal seeks to bridge a critical gap in the NHS, ensuring that all New Zealanders have access to timely and affordable medical care. Whether the government will adopt this targeted funding approach remains to be seen, but the letter adds a compelling voice to the broader conversation about how best to leverage tax policy for the public good.