It’s said barristers should never ask questions they don’t know the answer to, and the same advice may apply to politicians, writes St Vincent de Paul Society National Council president Mark Gaetani. Source: Eureka Street.
When Greens leader Adam Bandt asked the Parliamentary Budget Office (PBO) to advise him on the revenue foregone by Treasury due to negative gearing deductions and the capital gains tax (CGT) discount on residential investment properties, he likely knew the answer would be, to paraphrase, a helluva lot.
Now he has the details, as do we, and the figures are enormous. The response by the PBO, whose brief includes undertaking research for MPs on economic matters, said total tax foregone in the 2023-24 year was $10.92 billion.
The PBO noted that negative gearing is the total rental expenses of properties being greater than the total rent received, and that all negative gearing deductions related only to residential properties.
To be clear, this is money the federal Government will not have to spend on essential services such as health, education, housing or social security. This is not just a shortfall, it is a tragedy, as so many people’s lives are impacted by this lost revenue.
The St Vincent de Paul Society believes these tax benefits should be reviewed.
Meanwhile, we urge the threshold for CGT concessions to be lowered from the generous 50 per cent to 37.5 per cent in order to free up money for improving social services, especially social and affordable housing.
The second part of Bandt’s question generated an even more concerning response. This related to how much revenue would be foregone over the decade to 2034-35.
At the end of the column on projected foregone revenue for Treasury, which is to say money lost to the citizens of Australia, sat the eye-glazing figure of $165 billion – that’s $165,000,000,000.
The zeros go around a proverbial block that most aspiring homebuyers can’t afford to buy a home on. Investors are snapping up properties to enjoy the tax breaks offered by negative gearing (while they own the property) and the CGT (when they sell it).
As the federal election approaches, the St Vincent de Paul Society will continue to urge the major parties to address housing policies that exacerbate inequity and which, if resolved, would help create a fairer Australia.
FULL STORY
The two worlds of Australian housing (By Mark Gaetani, Eureka Street)
