Labour has confirmed it will introduce a capital gains tax at 15 per cent and a new top tax rate of 39 per cent on income above $150,000.

Labour leader Phil Goff said the package was about rebalancing the economy and about fairness.

There would be a tax free threshhold at $5000 and GST would be taken off fresh fruit and vegetables.

"This tax switch is about creating a fairer tax system. In fact under Labour the overwhelming majority of Kiwis will end up paying less tax not more," Mr Goff said.

It would enable New Zealand to "own its own future" by providing a platform that would avoid National's policy of selling assets.

The personal tax cuts would give those earning between $25,000 and $150,000 another $525 a year.

But someone on $175,000 a year would pay $975 more a year, and someone on $200,000 would pay $2475 more in tax.

The CGT will exclude the family home and is estimated to raise $78m in the first year rising to $2.27 billion by year 10.

"These changes won't be easy and some people won't like them. But it's the right thing to do," Mr Goff said.

The higher tax rate on personal income, which would be indexed, would affect about 2 per cent of earners.

Mr Goff said Labour's plan was a "game-changer" whose time had come.

Half of the revenue raised would go to the tax switch.

The rest would be used to pay off debt, while still holding state assets.

Finance Minister Bill English said the plan is a '' hodge-podge tax grab.''

''After making lavish spending promises over the past two years, it's had to come up with a hodge-podge tax grab that will be good only for the armies of bureaucrats and tax accountants needed to administer it.

''Even on their numbers - and with no accounting for their spending promises - Labour would borrow more every year until 2018/19.''

He said the proposals would see six income tax rates and a big gap between the company rate and the top tax rate. The CGT would apply to productive industries ''with a maze of exemptions that raises virtually no revenue in the first few years'.'

It would encourage tax avoidance, English said.

The Green party welcomed the capital gains tax plan, which they also support.

"This shift in Labour's policy will help lift our long-term economic performance and create a fairer, more progressive tax system,'' Co-leader Russel Norman said.

But he said the Greens had some concerns about Labour's proposals.

"A fairer, more consistent approach would be to tax capital gains at the marginal tax rate of the seller while indexing any capital gains for the effects of inflation. This would make the capital gains tax more progressive while treating all income alike.''

ACT leader Don Brash said Labour's plans were ''unrealistic, unimaginative and unwieldy.''

"This is not a time to be introducing new taxes and raising existing ones. Labour's CGT is quite simply a proposal to punish success. It is politics and economics as if envy mattered.''

BusinessNZ Chief Executive Phil O'Reilly said steeper tax rates for high earners would drive people from New Zealand. And he said their proposed system was opened to ''gaming.''

"This would erode the tax base, rather than building it up. Five percent of New Zealanders pay around a third of all income tax, and bumping up their tax risks reducing their ranks further and making New Zealand poorer.

"A capital gains tax as outlined by Labour is unlikely to help the economy either. ''

Because of the exemptions it would not raise much revenue, he said.

''It's the exact opposite of what is widely accepted as the fairest and most efficient system: a broad-based, low-tax policy.''

The system would be complicated and expensive to enforce.

''People would structure their assets to avoid it... Lawyers and accountants would be the main beneficiaries of the system.''

Labour would get net debt down to zero as quickly as National, while holding on to those assets, finance spokesman David Cunliffe said.

Based on Australia's experience, less than 10 per cent would pay the CGT in any one year.

Those on the highest income would pay the most. In Australia, those earning more than $180,000 paid 60 per cent of the CGT.

The family bach would be caught by the tax, but only if it was sold. If it was handed down through the generations, no CGT wuld be paid.

Shares would be caught and farm land would also be caught, though the main farm residence and the land around it used for domestic use would be exempt.

A special concession would be made to small businesses sold for retirement if they were sold by an owner who was aged more than 55 and had owned the business for more than 15 years. In that case the first $250,000 of capital gain would be exempt.

Collectibles such as jewellery, antiques and art works would be exempt too, as would goods bought for personal use, such as furniture, electronic goods or household items.

Losses on assets could be carried forward and could be offset aganst future capital gains.

Christchurch property would be exempt for at least five years to take account of the earthquakes' effect on values.

Withdrawals from Kiwisaver and lump sum payments from ACC or from redundancy would be exempt.

Assets in trusts would be taxed, but not the family home.

The CGT would apply to capital gains from the date of implementation, and would not take into account past capital gains.

Gifts would trigger a CGT but not if the asset is inherited.

Assets currently taxed an individual's marginal rate, such as for share traders, would continue to be taxed as they are now.

An experts' panel would advise on the final design of the system, which would take effect from April 2013.

The main points:

* The top tax rate goes up to 39 per cent for those earning more than $150, 000

* A capital gains tax at a rate of 15 per cent

* It will not apply to the family home. The main residence on a farm will be exempt but not the land

* Personal use items like boats and electronic goods will be exempt as are collectables like jewelry or antiques

* Withdrawals and payouts from retirement savings funds like Kiwisaver are exempt

* Real estate in the Canterbury Earthquake Recovery Authority zone will be exempt for five years

* Small businesses held by over 55s and held for more than 15 years will be Tax free for the first $250,000 of capital gains

*The first $5000 earned is free from tax

* GST will come off all fresh fruit and veg

- Labour says their top tax rate of 39 per cent will affect only the top 2 per cent of earners.

They say their plan - making the first $5000 tax free - means most will pay less personal income tax

Tax cuts:

Earned. Tax cut in a year

$25,000. $525

$50,000. $525

$75,000. $525

$100,000. $525

$125,000. $525

$150,000. $525

$175,000. -$975

$200,000. -$2475