As the Federal Election draws closer, property tax arrangements have again come under the spotlight, with one party calling for a staggered, but complete removal of the current capital gains tax discount.
The Greens yesterday announced their position on the current 50% CGT discount, claiming the removal would generate an additional $119.5 billion in revenue for the Federal government over the next 10 years.
Under the Greens’ plan, the CGT discount would be removed over a five-year period, with the discount being reduced by 10% each year.
Greens co-deputy leader and Housing spokesperson Senator Scott Ludlam said his party could see no justification for the CGT discount when other forms of income aren’t afforded similar discounts.
“This is because tax on other forms of income, such as weekly earnings and interest on savings, receives no such discount, so we can't see any justification for any part of capital gains to be tax-free," Ludlum said.
The Greens’ announcement is the latest to be made in relation to property taxes in recent times, with the Labor party announcing their CGT and negative gearing policies
, while the Coalition has seemingly resolved to make no changes to either
Stephen McGee, Queensland state director for National Property Buyers, said the Greens’ proposal was an example of politicians picking on the property sector.
“Politicians always seem to pick on property when it comes to finding a way to make a bit more money,” McGee said.
“I think [Senator Ludlum’s comment] is a pretty generalised statement. If you get rid of the CGT discount then you’re going to make long term investments less attractive to people. If somebody makes a smart decision why should they be punished by having to pay more tax?” he said.
Rich Harvey, chief executive officer of propertybuyer.com.au, said people should get used to politicians singling property taxes as areas where extra revenue can be generated.
“They’re absolutely something that is always going to be looked because of the volume of revenue that they generate. Whenever somebody is looking for a way to generate revenue they’ll reach for the tax lever on property,” Harvey said.
“What the Greens and everybody else need to do is to have a look at the incentives that the capital gains discount provides and do a cost benefit analysis of removing it compared to leaving it in situ. Investing in property would still be attractive if it was removed, but if you’re slowly removing its benefits the attractiveness will fall,” he said.
While Harvey said taxes on property are an easy target for people looking to score political points, he isn’t completely against the idea of looking at property taxes.
“What we need to have is a rational tax debate. Right now whoever announces something, be it the Greens, Labor or the Liberal party it just gets shot down by the others,” he said.
“If we’re ever going to have any taxation reform we need to have rigorous debate. When I was an economist if a proposal is made independent parties and analysts would all take a look at the same policies and we would get an idea of the impact it would have.”
The Greens’ proposal would remove the CGT discount from all asset classes, not just property and the party has previously committed to the removal of negative gearing.
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