Do-Nothing Malcolm rules-out CGT reform

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By Leith van Onselen

It’s one step forward, two steps back with the Coalition. After Fairfax speculated this morning that the Turnbull Government would move to unwind the capital gains tax (CGT) discount in the May Budget, Do-Nothing Malcolm has quickly moved to rule-out reform. From The SMH:

“We do not support the Labor Party’s plans to increase capital gains tax or indeed their plans to outlaw negative gearing. Our policy is… focused on encouraging investment and employment and the economic growth and opportunity that Australians need”.

“The only party that is an advocate for higher taxes is the Labor Party… We are a party of lower taxes, supporting investment, supporting employment, and bringing the Budget back into balance”.

Finance Minister Mathias Cormann also rejected the CGT speculation:

“Don’t believe everything you read in the newspaper. The story on the front page of the Financial Review today is wrong, there is no such proposal before the government”.

“The government has absolutely no intention of reducing the capital gains tax discount or making changes to negative gearing”.

“The Liberal-National Party Coalition is the party of lower taxes. We want to be able to deliver lower taxes so we can strengthen growth and create more jobs but we do need to get the budget back into surplus.”

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The Turnbull Government should probably have checked first with its master, the Property Council of Australia (PCA). Because in July last year the PCA agreed that the CGT discount should be cut:

“We have accepted that the 50 per cent discount in a low inflationary environment is significant,” the Property Council’s head of policy and housing Glenn Byres said. “We have also argued that there is also scope to increase the qualifying period to two years.”

The lobby group opposes Labor’s negative gearing proposal, but before the election backed a cut in the CGT discount to 40 per cent from the current 50 per cent and still holds that view…

On the Labor figures, the Property Council’s proposed reduction would equate to government saving of $1.72 billion in 2019.

You know its good policy when even the parasitical PCA admits the case for CGT reform is strong.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.