BERL chief economist Ganesh Nana says a capital gains tax will ensure the farming sector lifts its economic performance.
Labour is proposing that capital gains be taxed at 15% when an asset, such as a farm, is sold.
However, the family home, small businesses owned by people aged 55 and over, and, for the first five years, property in areas of Canterbury hit by the earthquakes, would be exempt.
Ganesh Nana told Nine to Noon that agricultural performance would improve if farmers were less focused on capital gains.
''The biggest change in behaviour is when we start getting the farming sector away from farming for capital gain, to farming for profit,'' he said.
He said a capital gains tax would help prevent farmers from becoming further indebted to the banks, as it would discourage them from buying more land.
Meanwhile, Federated Farmers president Bruce Wills says Labour needs to explain how new taxes on the productive sector would grow the size of the economic cake, or make housing cheaper for young families or help farmers wanting to buy their first farm.