Australia Treasurer Josh Frydenberg recently met with industry groups to hear their concerns about Labor party’s proposed policies.
The roundtable was convened by the Assistant Minister for Treasury and Finance, Senator Zed Seselja, and was also attended by Prime Minister Scott Morrison.
“Today the Prime Minister and the Assistant Minister to the Treasurer and myself, we sat down with the Real Estate Institute of Australia, the Master Builders of Australia, the Property Council of Australia and other experts, and everyone shared their concerns about Labor’s new housing tax,” Frydenberg said.
Bill Shorten, Labor’s party leader, asserts that government’s policies at present put investors at a disadvantage compared to first home buyers. In addition, he said the current rules overwhelmingly benefit people with high incomes.
With this in mind, the party announced that they are planning to limit negative gearing to newly built homes, and to half the 50% capital gains tax discount to 25%.
However, the weakening housing market over the last 18 months appears to be weakening Shorten’s claim that property taxation needs a shake up.
The Master Builders Association said that the proposal could cut 32,000 jobs and reduce dwellings being built to 42,000.
“Under the policy, everyone who owns a home will see it be worth less, and under that policy, everyone who rents a house will end up paying more,” Frydenberg said.
The Property Council of Australia is also against the said changes. “Now is not the time to be making changes to negative gearing or capital gains tax that undermine investor confidence in new or established housing, which helps meet the housing needs of the one-third of Australian households who rent,” said Ken Morrison, property council chief executive.
The property council stated that nine of out 10 property investors own just one or two investment properties, with the majority owning a single investment property. Backed by the current taxation arrangements, these investors are essential in meeting demand for rental housing.
“The current arrangements for negative gearing and capital gains tax must be left in place to ensure these Australians continue to be encouraged to invest in property to support their own retirement as well as meet the housing needs of other Australians,” Ken Morrison said.
