Labor has released a Treasury document that states its negative
gearing policies could cut house prices in the short term but, over
time, the impact will be “relatively modest”.
The opposition has seized on the document, released under freedom of information, as proof the government exaggerated claims that changing the tax treatment of property would be a “sledgehammer” to the economy.
Before the 2016 election Labor promised to restrict negative gearing to new homes and reduce the capital gains concessions from 50% to 25%.
The Treasury analysis from 2016 contains a table showing the expected impact of Labor’s policy on various asset types. It concludes that, for residential investment properties and owner-occupied housing, the policy “could introduce some downward pressure on property prices in the short term”.
“In the long term, increases in taxation on rental property could have a relatively modest downward impact on property prices,” it said.
The document notes that “returns for Australian investors will fall
under the policy” but owner-occupiers would be unaffected, limiting the
impact on property prices.
It said that changes to negative gearing from 1985 to 1987 and the introduction of the CGT discount in 1999 “had little discernible impact on the market”.
“Overall, price changes are likely to be small, though the composition of ownership may shift away from domestic investors.”
The document also confirms distributional modelling of Labor’s policies stating that more than 50% of the benefits of negative gearing go to the top 20% of income earners, while the top 10% of income earners receive nearly 75% of the benefit of the capital gains tax discount.
The treasurer, Scott Morrison, responded to Labor’s policies with claims the package would “crash” confidence in the economy, while Malcolm Turnbull said it amounted to taking a “sledgehammer” to the property market.
The shadow treasurer, Chris Bowen, said the document, which the Australian information commissioner ordered be released, “directly refutes” the Liberals’ “overblown attack on Labor’s housing affordability policies”.
He said it was clear the criticisms were “little more than outright lies”.
“Scott Morrison loves to selectively leak Treasury advice when it suits him and yet this critical advice was withheld for almost two years.”
Bowen noted that cabinet had considered changes to rein in the “excesses” of negative gearing but Turnbull ruled them out after Labor released its policy, a commitment he renewed in 2017.
“Labor is the only major party with a set of housing affordability policies which will help level the playing field between first home buyers and property investors,” Bowen said.
The opposition has seized on the document, released under freedom of information, as proof the government exaggerated claims that changing the tax treatment of property would be a “sledgehammer” to the economy.
Before the 2016 election Labor promised to restrict negative gearing to new homes and reduce the capital gains concessions from 50% to 25%.
The Treasury analysis from 2016 contains a table showing the expected impact of Labor’s policy on various asset types. It concludes that, for residential investment properties and owner-occupied housing, the policy “could introduce some downward pressure on property prices in the short term”.
“In the long term, increases in taxation on rental property could have a relatively modest downward impact on property prices,” it said.
It said that changes to negative gearing from 1985 to 1987 and the introduction of the CGT discount in 1999 “had little discernible impact on the market”.
“Overall, price changes are likely to be small, though the composition of ownership may shift away from domestic investors.”
The document also confirms distributional modelling of Labor’s policies stating that more than 50% of the benefits of negative gearing go to the top 20% of income earners, while the top 10% of income earners receive nearly 75% of the benefit of the capital gains tax discount.
The treasurer, Scott Morrison, responded to Labor’s policies with claims the package would “crash” confidence in the economy, while Malcolm Turnbull said it amounted to taking a “sledgehammer” to the property market.
The shadow treasurer, Chris Bowen, said the document, which the Australian information commissioner ordered be released, “directly refutes” the Liberals’ “overblown attack on Labor’s housing affordability policies”.
He said it was clear the criticisms were “little more than outright lies”.
“Scott Morrison loves to selectively leak Treasury advice when it suits him and yet this critical advice was withheld for almost two years.”
Bowen noted that cabinet had considered changes to rein in the “excesses” of negative gearing but Turnbull ruled them out after Labor released its policy, a commitment he renewed in 2017.
“Labor is the only major party with a set of housing affordability policies which will help level the playing field between first home buyers and property investors,” Bowen said.
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