THE building industry has hit out at Labor’s proposed changes to negative gearing, labelling the policy a “populist response”. Existing investors would not be affected by the changes.
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“It can not be rationally argued anything else but with a capital gains tax subsidy of 50 per cent, that the whole system is accessibly distorted and overly generous in favour of income from capital instead of income from earnings”, Mr Shorten said…
He also dismissed Labor’s claims that the policy would raise $32 billion over a decade, saying the Budget was constructed over four years.
“We knew when we took this decision… that this would be controversial”, he said.
It says those benefiting from the tax break for negative gearing property and the capital gains discount are concentrated in the higher income ranges, as low and middle income earners are more likely to spend their income on consumption while higher income people are able to accumulate capital and use tax benefits.
‘Labor will help level the playing field for first home buyers competing with investors and we will put the great Australian dream back within the reach of the working and middle-class Australians who have been priced out of the housing market for too long.
The Turnbull government has rejected Labor’s policy to restrict negative gearing to new properties.
According to the council, two million Australians now own an investment property and of those, 1.2 million negatively gear.
But there would be no change for existing negatively geared property.
“Independent research commissioned by the REIA shows that around 27% of all loans for the construction of new housing in 2014 were to investors and that this proportion has remained relatively constant over the last 30 years (refer to the graph below)”.
The Greens this week also wrote to Mr Morrison proposing superannuation and negative gearing reforms, but Mr Morrison has not yet accepted the invitation to negotiate with the minor party.
“There are areas within the system where they’re excessive, and there is a way to channel that sort of high-end investment into other areas”, he said. “Clearly they’re looking at options”, Property Council chief executive Ken Morrison said. Morrison said that once again Shorten’s numbers “just don’t add up”.
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Therefore, as a policy to boost housing supply and improve rental availability and affordability, negative gearing has been an epic fail since all it has done is substitute homes for sale into homes for let, at great cost to the Budget.
