5 years ago
TURNBULL IGNORES EVIDENCE FOR TAX REFORM
SENATOR THE HON DOUG CAMERON
The Australian Housing and Urban Research Institute’s latest findings on the interaction between tax policy and the housing market has provided yet more evidence that well designed tax reforms can make a significant contribution to improving housing affordability.
AHURI’s report entitled ‘Pathways to housing tax reform’has found that while Australia is experiencing a period of sustained economic growth, housing affordability has declined sharply in recent years and the shortage of suitable affordable housing is having far-reaching economic and social impacts on Australians.
The report is highly critical of the Turnbull Government’s stubborn refusal to deal with the distortions created by its negative gearing and capital gains tax concessions for wealthy property investors.
The report notes that “Australia has some of the most generous negative gearing provisions within the OECD” and that there is “increasing evidence that tax policy settings are contributing to the problem, exacerbating intergenerational inequality, inflated housing prices and reduced mobility.”
The report also refutes the claim by Scott Morrison that it is Australians on modest incomes that benefit most from these generous tax concessions.
“In the case of both negative gearing and discounted CGT, it is higher income earners who benefit the most. Hence, both policies potentially exacerbate economic inequality between high and low-income groups.
Negatively-geared investments appear more likely to be for the short-term, suggesting that the availability of negative gearing does not necessarily promote long-term secure rental housing supply.”
In spite of the overwhelming evidence, Malcolm Turnbull and Scott Morrison continue to defend the existing tax arrangements, which sees the vast bulk of financial benefit flow to those in the top 10 percent of income distribution.
Unlike the Liberals, Labor believes that worsening housing affordability and increasing homelessness are serious social and economic challenges that must be addressed.
Labor has a plan to improve housing affordability, increase financial stability, reduce homelessness and boost jobs. This plan includes tackling unfair tax concessions head-on by:
- Reforming negative gearing so that deductions can only be claimed on newly built homes, which will increase supply and create construction jobs.
- Reforming capital gains tax concessions, cutting it by half to 25%, which will reduce incentives for investing in property only in order to realise capital gains.
Labor is acutely aware that housing affordability remains an ongoing challenge for many Australians and we will continue to articulate policies and provide the leadership the Turnbull Government has failed to demonstrate on this issue.