Young Labour furious at capital gains tax backdown, leak reveals

Labour is facing a massive backlash from its base for ditching any hope of a capital gains tax (CGT) - even Young Labour and the ever-loyal unions are fuming.

Prime Minister Jacinda Ardern was in Hastings on Thursday for several local events, and even took a moment to harvest kūmara.

But if only there were such sweet treats for the Labour Party base, who are annoyed about the scuppered CGT.

"I share that disappointment. CGT was a tool that I felt would bring greater fairness to our tax system," Ardern said.

Labour's traditional allies, the unions, are also deeply disappointed.

"It was a let-down. We thought this was an opportunity to make our tax system fairer, for everyone to pay their fair share," said Richard Wagstaff from the Council of Trade Unions.

"We have lost that chance now and, of course, we are really disappointed."

New Zealand First forced the CGT backdown and Newshub's been leaked a discussion from a secret Young Labour Facebook group revealing they're frustrated with the decision.

The Labour Party faithful say they're "mighty disappointed" and "exponentially angry at New Zealand First's role", and complaining of "unfulfilled promises".

In Hastings, there are signs of the kind of inequality Labour said a CGT would help address.

"Right now, we have got 880 members of our community living in motel rooms," said Nigel Bickle, the Hastings District Council chief executive. Of those people, 440 were children

While the CGT's gone, there's lots yet to do on housing and inequality.

The Prime Minister said she fought for the tax.

"As people will have well remembered, in 2017 I campaigned on this issue."

But it took two months for the Government to respond to the Tax Working Group's recommendation - two months Labour didn't publicly argue the case for a CGT leaving a void for critics like the National Party to fill.

The Prime Minister had her hand forced by New Zealand First, but it was her decision to rule out ever campaigning on it in the future.

Now the base is hitting back - Young Labour voters and the unions - and that will hurt Labour bad.