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.”
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
10 ways to reduce your tax bill
With the tax return deadline only one month away, these tips could help minimise your tax bill. ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
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
10 ways to reduce your tax bill
With the tax return deadline only one month away, these tips could help minimise your tax bill. ...Read more
