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The tax reform debate turns from stage 3 cuts to the concessions available for property investors ahead of the federal budget.
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Pressure mounts on government to curb negative gearing, CGT
13 February 2024
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The government is under growing pressure to put negative gearing and CGT back on the tax reform agenda, with the Greens on Monday vowing to withdraw support for a key housing bill to force Labor’s hand.
Treasurer Jim Chalmers said on Sunday that the government already had a “pretty full book when it comes to tax reform” but Greens housing spokesperson Max Chandler-Mather said they would continue piling the pressure on the government to change its mind.
“Pressure works,” he said in a statement on Monday, making it clear the party’s support for Labor’s Help to Buy shared equity bill would be contingent upon curbing tax concessions for property investors.
“Labor changed their position on stage 3 tax cuts and now they need to change their position on negative gearing and capital gains tax. If Labor ignores us they will lose at the ballot box.”
Just a day prior, Mr Chalmers told Sky News unequivocally that negative gearing and CGT reform was “not something that we’re proposing, not something that we are considering, not something that we are working up”.
“Our focus is on legislating our cost‑of‑living tax cuts for middle Australia, changes to the PRRT, changes to superannuation tax concessions; we’ve got a whole multinational tax agenda, issues around compliance, cleaning up after the PwC scandal. There's a whole bunch of tax reform underway,” he said.
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However, the Greens hold the balance of power in the Senate, meaning the government would need their support to pass the Help to Buy scheme as well as its big-ticket tax reform policies.
Greens leader Adam Bandt said: “In negotiations with the government over the Help to Buy legislation we’ll push Labor to end the tax handouts for big property investors, freeze rents and build public housing to help renters and first home buyers.”
According to the Greens, “tax handouts” like negative gearing and the 50 per cent CGT discount cost the government $39 billion in foregone revenue.
Mr Chandler-Mather said houses could be more affordable if the government limited the concessions and redirected the saved revenue to public housing.
“The system is stacked against renters and first-home buyers. Tax handouts for big property investors, like negative gearing, make it easier for a big property investor to buy their 7th property than for a first home buyer to buy their first home,” he said.
“Property prices and rents are growing way faster than wages, putting home ownership even further out of reach for millions of people, and we can’t fix this until the government stops handing out billions of dollars in tax concessions to big property investors.”
The Greens’ statement on Monday follows similar calls from crossbenchers David Pocock and Jacqui Lambie last week.
“You’ve got to look at the tax system that incentivises housing as an investment. It shouldn’t be easier to buy your second home than your first. This has been happening for years now and we’ve got to start turning that around by looking at CGT discounts on investment properties and looking at negative gearing,” Mr Pocock said.
Ms Lambie said: “I understand you want investment, and not just your super, but how many houses do you need to invest in? I just remind those people you can’t take that money with you when you’re 10 feet under.”
Meanwhile, building industry body Master Builders Australia said “curtailing investor incentives like negative gearing and capital gains tax discounts reduces housing supply rather than improve it”.
“With the current downturn in new building approvals and investments in new housing, why we would take a sledgehammer to investors including mums and dads beggars belief,” CEO Denita Wawn said.
She argued reducing the incentives would reduce the number of homes built and cause thousands of job losses in the sector.
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