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Labour is accusing the Government of resorting to deliberate misinformation over the impact a capital gains tax (CGT) could have on rents.
A rise in rents is one of the angles of attack ministers have been using against Labour's proposed CGT, announced yesterday.
It would impose a 15 percent tax on profits from the sale of investment properties, farms, shares and businesses, raising a predicted $26 billion over 15 years.
Family homes are exempt from the proposed tax.
Labour associate finance spokesman David Parker said today claims rents would go up because investors would be less likely to go into the property market were irresponsible and wrong.
"We need a sensible discussion about this," he said.
"Similar claims of disastrous consequences were made in Australia at the time the government introduced a capital gains tax there and those fears were unfounded...Australia's experience has been that while rents have increased, they have increased only by the rate of inflation in line with pre-CGT rental increases."
Mr Parker said rent was about supply and demand.
"A capital gains tax will not cause a big hike in rents, what it will do is take the pressure off house prices, making it easier for people to buy homes."
Mr Parker said it astounded him to hear New Zealand investors saying they were going to leave and invest across the Tasman, when Australia introduced a CGT in 1985.
Finance spokesman David Cunliffe also accused ministers of being "blatantly misleading" and said Finance Minister Bill English had told Radio New Zealand that people who regularly and intentionally traded for capital gain would have their tax reduced to 15 cents in the dollar.
"Labour's CGT is quite clear, anyone who can read can see it there in black and white," Mr Cunliffe said.
"At the moment these traders have their income from this source taxed as part of the personal tax system at their marginal tax rate. This will continue to be the case."
Mr Cunliffe said the Inland Revenue Department (IRD) suspected there were a number of people who were trading in property but weren't paying a cent in tax, let alone their fair share.
"A capital gains tax will ensure that everyone pays tax, we will also provide the IRD with the resources to really go after those who are trying to avoid paying their tax," he said.