iscover Cut CGT to 25% to make housing more affordable, unions say
TaxA reduction in the capital gains tax discount could go a long way towards addressing the housing affordability crisis, according to the Australian Council of Trade Unions.
Home ownership for working Australians is at the forefront of the union’s argument, with the current 50 per cent CGT discount said to favour landlords with multiple investment properties, whilst younger workers are increasingly priced out of the communities they work in.
In a submission to the Select Committee on the Operation of the Capital Gains Tax Discount, the ACTU called to halve this discount. A 25 per cent CGT discount, it said, would halt the mechanism that has allowed the very rich to pay lower rates through multiple investments.
According to Treasury data, this discount mostly benefits the richest 1 per cent of Australians.
Since the introduction of the discount in 1999, fourteen years after CGT was first implemented to address tax avoidance, the gap between house prices and workers’ income has broadened exponentially.
What once took an average of six years’ income to buy a house today takes 11. Not only are workers having to relocate further away from their place of work, but home ownership is an increasingly impossible achievement.
ACTU President Michele O’Neil said: “Accelerating rents and house prices are outpacing the money people can save each week.”
Other parties mirrored this sentiment: in its December submission to the Senate inquiry, as reported recently, the Grattan Institute purported that the 50 per cent discount overcompensated property investors for inflation, and called for a reduction to 25 per cent for individuals and trusts.
ANU’s Tax and Transfer Policy Institute suggested a 40 per cent CGT discount.
According to the ACTU, reconsidering this discount and imposing limits on negative gearing would allow for greater attention to the housing crisis, but should be done with consideration.
“Phasing this in is important, giving people who’ve followed the rules to date time to adjust,” O’Neil said.
A proposed change would apply to new housing investments beyond a single investment property, and the current arrangements would not be altered for up to five years. This revenue, according to the ACTU, should be co-invested with the states into public and social housing.
O’Neil said this would start to address the current imbalance in our tax system, stating: “The discount is effectively paid for by working people who pay much higher rates of tax in line with their personal income.”
“Our tax system shouldn’t reward wealth more than work”.
Amelia is a Professional Services Journalist with Momentum Media, covering Lawyers Weekly, HR Leader, Accountants Daily and Accounting Times. She has a background in technical copy and arts and culture journalism, and enjoys screenwriting in her spare time.
