THE AUSTRALIAN
Developers have called for property taxes to be looked at “holistically” in the event that a possible early federal election next year forces tax back into the spotlight.
Given the uncertainty over the citizenship status of several federal politicians, a potential series of by-elections or a general election could throw into relief the major parties’ policies on negative gearing and the capital gains tax discount.
In this year’s budget, the government made only modest changes to negative gearing arrangements, scrapping deductions for travel expenses and limiting plant and equipment depreciation deductions. The opposition took a policy to last year’s election to limit negative gearing to new homes only and cut the capital gains tax discount in half from 50 per cent to 25 per cent.
Mirvac chief executive Susan Lloyd-Hurwitz said negative gearing had been an important source of rental supply in Australia in the absence of a build to-rent sector.
“Our hope is that if there are any changes to negative gearing and concessional capital gains tax that it’s looked at holistically,” Ms Lloyd-Hurwitz said.
“Tax reform can’t be attempted piecemeal. There has to be a holistic look at how all taxes interact to support the creation of the housing stock that we need.”
Acknowledging her role as president of the Property Council, Ms Lloyd-Hurwitz called for the replacement of state-based stamp duties with a broad based land tax, even though this would be “enormously difficult and complex” from a political perspective.
Stockland chief executive Mark Steinert highlighted the industry’s contribution to the Australian economy broadly and to government revenues.
“There’s $6.4 trillion invested in the Australian housing market so any future tax reform, including policy review of capital gains tax concessions and negative gearing, needs to be considered holistically and as part of a broader package of initiatives to avoid destabilising effects,” Mr Steinert said.
The Property Council of Australia previously has opposed changes to negative gearing but favoured a reduction in the CGT discount to 40 per cent.
“The changes to taxation arrangements for negative gearing and capital gains tax are revenue-raising measures and not housing affordability measures,” PCA chief of policy and housing Glenn Byres said.
Urban Development Institute of Australia national president Michael Corcoran said the negative gearing and CGT regime had been “highly successful” in encouraging investors to create new supply. The group does not support changes to these taxes.
Bankwest Curtin Economics Centre deputy director Rachel Ong ViforJ said “meaningful reforms” to the two taxes could help first-home buyers, and transitional arrangements such as grandfathering or changes phased in across a longer period could address supply concerns.