Save
‘We can’t tax our way out’: HIA
Increasing capital gains tax (CGT) will hit state revenue, renters and first home buyers by pushing investors out, the Housing Industry Association has said.
‘We can’t tax our way out’: HIA
Increasing capital gains tax (CGT) will hit state revenue, renters and first home buyers by pushing investors out, the Housing Industry Association has said.
“According to research released today, an increase in capital gains tax would result in a $1 billion reduction in revenue to state governments, increase the cost of renting and exacerbate the housing affordability challenge,” said Tim Reardon, HIA’s principal economist.
“The analysis shows that increasing CGT would generate a revenue gain for the federal government of $0.5 billion a year which would be dwarfed by stamp duty tax losses to the states in excess of $1 billion per year,” he continued.
The research, carried out by the Centre for International Economics (CIE) and commissioned by the HIA to investigate the impacts of changes to CGT, found that while increasing CGT on investment properties would help first home buyers enter the market initially, eventually this will recede as rental costs rise, and with them property prices.
“The RBA, Productivity Commission, federal and state treasurers have all identified the constraints on the supply of housing as an underlying cause of housing affordability challenge,” Mr Reardon said
“Increasing the tax on housing will result in less investment in housing, fewer houses being built and inevitably a worsening of the affordability challenge.
“We cannot tax our way out of the housing affordability problem.”
Further, grandfathering existing properties from CGT changes would only serve to magnify the problem, the report and Mr Reardon noted.
“Grandfathering reduces revenue from stamp duty to the states by reducing the number of homes built, and delays the inflow of additional CGT revenue to the federal government for decades.”
Rather, he argued, improving housing affordability requires all levels of government and industry to consider the type and location of housing needed to meet the pent-up demand.
Chris Bowen disagrees
Responding to the modelling, shadow treasurer Chris Bowen said the HIA has historically opposed Labor’s policies to improve housing affordability, and argued the modelling does not reflect Labor’s policy as it ignores the proposed negative gearing reforms.
“The modelling concludes that halving the CGT discount across all asset classes will see house prices increase. It also concludes that some tenants “will switch and become owner occupiers”, in other words, increasing home ownership,” Mr Bowen said in a statement.
“The HIA modelling comes two years too late for Kelly O’Dwyer who was quick out of the blocks to argue Labor’s housing affordability policies would see house prices increase – the exact opposite of what Malcolm Turnbull has been arguing for the past two years,” he continued.
He noted that the modelling is inconsistent with Commonwealth Treasury modelling of Labor’s proposed reforms which found increases in taxation on rental property could have a light downward impact on property prices, with unaffected owner occupiers likely to moderate any price softening.
With this in mind, Mr Bowen added that the HIA’s position on CGT is at odds with the International Monetary Fund, the OECD, the Grattan Insitute, Joe Hockey, Saul Eslake, the Australian Institute of Company Directors and the Property Council of Australia.
“Winding back tax expenditures like the CGT tax discount is a more equitable and efficient way of raising revenue than the Turnbull government’s income tax increases to people with incomes as low as $21,000.
“Labor’s housing affordability policies have been specifically designed to stimulate new housing supply by continuing to allow negative gearing arrangements for investments in new housing stock, while protecting existing investments.”
RELATED ARTICLES
Tax saving
Navigating tax laws for capital gains in 2023
The landscape of Australian tax laws surrounding capital gains is ever-changing, with 2023 being no exception. Read more
Tax saving
What you need to know about the tax implications of crypto
One million Aussies are now invested in crypto, but many have not thought about how these investments will affect them at tax time. Read more
Tax saving
Welfare overhaul could give recipients a leg-up
Australia’s Centrelink recipients who’ve been doing it tough are in for a potentially easier time if the federal government pursues ambitious reforms that could provide sturdier safety nets. Read more
Tax saving
Students should think twice before tapping into their super
Former students might want to think carefully before they look to take advantage of the federal government’s biggest first home buyer incentive. Read more
Tax saving
Advocates call for an end to tax cuts
Social services sector advocates have warned that further tax cuts may make solving Australia’s biggest challenges much harder. Read more
Tax saving
ATO and AUSTRAC may gain new phone-tapping powers
A proposed update to electronic surveillance legislation could see the ATO armed with new powers that would allow the agency to bug phones and intercept online communications. Read more
Tax saving
Over 2m Aussies asked the TPB for help during the last year
As the economy recovers, Australia’s tax regulator says it’s planning to put unregistered practitioners under the microscope. Read more
Tax saving
Will you pay higher taxes due to bracket creep?
Bracket creep will see Australians paying more tax on average, unless further cuts are introduced in the future. Read more
Tax saving
Navigating tax laws for capital gains in 2023
The landscape of Australian tax laws surrounding capital gains is ever-changing, with 2023 being no exception. Read more
Tax saving
What you need to know about the tax implications of crypto
One million Aussies are now invested in crypto, but many have not thought about how these investments will affect them at tax time. Read more
Tax saving
Welfare overhaul could give recipients a leg-up
Australia’s Centrelink recipients who’ve been doing it tough are in for a potentially easier time if the federal government pursues ambitious reforms that could provide sturdier safety nets. Read more
Tax saving
Students should think twice before tapping into their super
Former students might want to think carefully before they look to take advantage of the federal government’s biggest first home buyer incentive. Read more
Tax saving
Advocates call for an end to tax cuts
Social services sector advocates have warned that further tax cuts may make solving Australia’s biggest challenges much harder. Read more
Tax saving
ATO and AUSTRAC may gain new phone-tapping powers
A proposed update to electronic surveillance legislation could see the ATO armed with new powers that would allow the agency to bug phones and intercept online communications. Read more
Tax saving
Over 2m Aussies asked the TPB for help during the last year
As the economy recovers, Australia’s tax regulator says it’s planning to put unregistered practitioners under the microscope. Read more
Tax saving
Will you pay higher taxes due to bracket creep?
Bracket creep will see Australians paying more tax on average, unless further cuts are introduced in the future. Read more
More articles
OUR PLATFORMS AND BRANDS
- Accountants Daily
- Accounting Times
- Adviser Innovation
- Australian Aviation
- Broker Daily
- Cyber Daily
- Defence Connect
- Fintech Business
- HR Leader
- Independent Financial Adviser
- Investment Centre
- Investor Daily
- Lawyers Weekly
- Money Management
- Nestegg
- Property Buzz
- Real Estate Business
- Smart Property Investment
- SMSF Adviser
- Space Connect
- Super Review
- The Adviser
- Wellness Daily
- World of Aviation
EVENTS AND SUMMITS
- ACE25 The Accounting Conference and Exhibition
- Adviser Innovation Summit
- Australian Accounting Awards
- Australian AI Awards
- Australian Aviation Awards
- Australian Aviation Summit
- Australian Broking Awards
- Australian Cyber Awards
- Australian Cyber Summit
- Australian Defence Industry Awards
- Australian Law Awards
- Australian Law Forum
- Australian Space Awards
- Australian Space Summit
- Australian Wealth Management Awards
- Australian Wealth Management Summit
- Better Business Awards
- Better Business Summit
- Broker Innovation Awards
- Broker Innovation Summit
- Budget Summit
- Commerical Finance Awards
- Corporate Counsel Summit
- Defence & National Security Workforce Awards
- Fund Manager of the Year Awards
- ifa Excellence Awards
- Lawyers Weekly 30 Under 30 Awards
- New Broker Academy
- Partner of the Year Awards
- Partner Summit
- REB Awards
- Rising Star Awards
- SME Bootcamp
- SMSF Technical Strategy Day
- Super Fund of the Year Awards
- Women in Finance Awards
- Women in Finance Summit
- Women in Law Awards
- Women in Law Forum
LEARNING AND EDUCATION
MOMENTUM MARKETS NETWORK
LINKS
STAY CONNECTED
Make your nest egg grow. Register now for nestegg updates.