The Parliamentary Budget Office (PBO) has presented research on negative gearing and the capital gains tax (CGT) discount, which would have been useful in 2018-19.
According to the PBO, both tax lurks overwhelming benefit higher income earners – something MB has argued for years:
57 per cent of negative gearing deductions go to the top 20 per cent of income earners.
There are 941 words left in this subscriber-only article.
Meanwhile, the top 10 per cent of earners claim more in capital gains tax deductions than the remaining 90 per cent combined, the analysis found…
The Grattan Institute’s Brendan Coates also noted that these concessions have cost the federal budget $63 billion over a decade.
The Greens, who commissioned the PBO’s research, have promised that if they hold the balance of power, then they will force Labor to restrict negative gearing to one property, which leader Adam Bandt claims “could make a $63 billion saving over a decade”:
“In balance of power, the Greens will kick the Liberals out and push Labor to fix the housing affordability crisis.”
While I agree with the Green’s policy, it will ultimately be futile. Voters had the opportunity to vote on negative gearing and CGT reform in the past two elections and chose otherwise.
Meanwhile, AMP chief economist Shane Oliver believes property related tax breaks were “second order issues” and that the chronic lack of supply in Australia was the real culprit of housing affordability. The Grattan Institute has regularly made similar arguments.
If this is the case, why reboot ‘Big Australia’ mass immigration? Any supply shortfall was caused by extreme immigration-driven population growth, which overran the nation’s capacity to build homes and infrastructure.
The Grattan Institute can’t ardently support mass immigration and then credibly whine incessantly about a lack of housing supply. The former causes the latter.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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