Extract from The Guardian
Coalition told months ago more than half the benefits of negative gearing went to wealthiest 20% of households, ABC reveals
The Labor party
has seized on revelations the Coalition received Treasury advice months
ago that said wealthy people were the biggest beneficiaries of negative
gearing, but continued to campaign on the issue as bringing benefit to
average Australians.
According to a report from ABC News, the Coalition was provided with modelling from Treasury which showed the top 20% of incomes in Australia shared more than half of the negative gearing tax benefits, and the lowest quintile received just 5.2%.
The redacted document, obtained under freedom of information laws, found capital gains tax discounts also benefited high-income earners. It said the top 10% of earners accounted for about 75% of the savings.
It assessed Labor’s proposals to end negative gearing on existing properties from July 2017, and for the capital gains tax discount to be halved from 50% to 25%, finding the combined effect could net the government an extra $6bn a year.
Removing negative gearing alone would be bring in about two thirds of the budget windfall, with an increase in revenue in the long run by between $3.4bn and $3.9bn, depending on the increase in construction prompted by the new housing exemption, the document said.
The opposition leader, Bill Shorten, accused the Liberal party of “dishonestly” trying to keep the advice from the Australian people.
“The negative gearing tax subsidies proportionally favour the well off,” he told reporters on Saturday. “Everyone else is missing out.”
The shadow treasurer, Chris Bowen, said the treasurer, Scott Morrison, had concealed information which “destroys his own scare campaign”, and had lost credibility.
“Scott Morrison has been traversing the country over the last few months claiming the benefits of negative gearing somehow flow to low and middle income earners – but his own department had advice clearly showing the benefits of negative gearing overwhelmingly flow to high income earners,” he said.
The prime minister. Malcolm Turnbull. and Morrison have consistently railed against the Labor proposal, which Turnbull said would lead to “a reckless trifecta of lower home values, higher rents and less investment”.
Last month Morrison said Labor’s proposal would “crash” confidence in the economy.
On Friday he maintained that two thirds of Australians using negative gearing had an income – after tax – of less than $80,000, and the document didn’t change that. He told the ABC the numbers were sourced from a university academic, not Treasury numbers and not endorsed by Treasury.
The analysis was prepared more than three months ago by a third party and provided to Treasury, which included it in briefings for government ministers, the ABC report said.
The revelation echoes news from May that Morrison also dismissed advice in an internal Reserve Bank document which said “any change which discourages negative gearing may be a good thing from an [financial security] perspective,”
At a Guardian Live event last week, real estate agent John Knott told the panel: “If most people realised the benefits people are getting from negative gearing, it would stop tomorrow.”
The Greens leader, Richard Di Natale, accused the government of running a “silly little scare campaign” and said the Greens were the first to speak up about the “massive tax break” of negative gearing and Labor were now adopting some of their policies.
“It makes housing unaffordable for young people across Australia,” he told media at the New South Wales Greens campaign launch.
“Malcolm Turnbull needs to ditch the ‘Tony Abbott facts don’t matter’ approach to politics and stop this silly little scare campaign around negative gearing. The truth is this is an unfair tax break which goes predominantly to people on high incomes, and the Greens want to stop it.”
On Thursday the Coalition’s campaign spokesman, Mathias Corrman, said the shared policy was indicative of the “anti business agenda of both parties”.
“Their introduction would be only the first tranche of a tax assault that would be levied on the Australian businesses by Labor and the Greens to pay for their extravagant and uncosted promises.”
According to a report from ABC News, the Coalition was provided with modelling from Treasury which showed the top 20% of incomes in Australia shared more than half of the negative gearing tax benefits, and the lowest quintile received just 5.2%.
The redacted document, obtained under freedom of information laws, found capital gains tax discounts also benefited high-income earners. It said the top 10% of earners accounted for about 75% of the savings.
It assessed Labor’s proposals to end negative gearing on existing properties from July 2017, and for the capital gains tax discount to be halved from 50% to 25%, finding the combined effect could net the government an extra $6bn a year.
Removing negative gearing alone would be bring in about two thirds of the budget windfall, with an increase in revenue in the long run by between $3.4bn and $3.9bn, depending on the increase in construction prompted by the new housing exemption, the document said.
The opposition leader, Bill Shorten, accused the Liberal party of “dishonestly” trying to keep the advice from the Australian people.
“The negative gearing tax subsidies proportionally favour the well off,” he told reporters on Saturday. “Everyone else is missing out.”
The shadow treasurer, Chris Bowen, said the treasurer, Scott Morrison, had concealed information which “destroys his own scare campaign”, and had lost credibility.
“Scott Morrison has been traversing the country over the last few months claiming the benefits of negative gearing somehow flow to low and middle income earners – but his own department had advice clearly showing the benefits of negative gearing overwhelmingly flow to high income earners,” he said.
The prime minister. Malcolm Turnbull. and Morrison have consistently railed against the Labor proposal, which Turnbull said would lead to “a reckless trifecta of lower home values, higher rents and less investment”.
Last month Morrison said Labor’s proposal would “crash” confidence in the economy.
On Friday he maintained that two thirds of Australians using negative gearing had an income – after tax – of less than $80,000, and the document didn’t change that. He told the ABC the numbers were sourced from a university academic, not Treasury numbers and not endorsed by Treasury.
The analysis was prepared more than three months ago by a third party and provided to Treasury, which included it in briefings for government ministers, the ABC report said.
The revelation echoes news from May that Morrison also dismissed advice in an internal Reserve Bank document which said “any change which discourages negative gearing may be a good thing from an [financial security] perspective,”
At a Guardian Live event last week, real estate agent John Knott told the panel: “If most people realised the benefits people are getting from negative gearing, it would stop tomorrow.”
The Greens leader, Richard Di Natale, accused the government of running a “silly little scare campaign” and said the Greens were the first to speak up about the “massive tax break” of negative gearing and Labor were now adopting some of their policies.
“It makes housing unaffordable for young people across Australia,” he told media at the New South Wales Greens campaign launch.
“Malcolm Turnbull needs to ditch the ‘Tony Abbott facts don’t matter’ approach to politics and stop this silly little scare campaign around negative gearing. The truth is this is an unfair tax break which goes predominantly to people on high incomes, and the Greens want to stop it.”
On Thursday the Coalition’s campaign spokesman, Mathias Corrman, said the shared policy was indicative of the “anti business agenda of both parties”.
“Their introduction would be only the first tranche of a tax assault that would be levied on the Australian businesses by Labor and the Greens to pay for their extravagant and uncosted promises.”
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