At last week’s Tax Forum, David Koch, once finance reporter, now better known as Sunrise’s Kochie, added his voice to the many speaking out against the tax loopholes that distort the housing market and push up house prices.
What struck me about Kochie’s statement was the example he gave of a TV advertisement which told investors to get into property and ‘let the taxman pay half’. Hang on. Who’s the tax man? Wayne Swan? No. We’re all the tax man.
What the ad should have said is invest in property and ‘let your fellow Australians pay half’, but that wouldn’t be half as attractive would it?
Not only are we all the taxman, we all, in one way or another, suffer from the high cost of housing in Australia, driven in part by the tax loopholes around in investment housing.
I am sure, that among the 1.6 million taxpayers claiming negative gearing deductions, there are parents with adult children still living at home because they can’t afford to move out, there are parents with adult children struggling in the rental market, and there are people who’d like to buy a home to live in, but they can’t afford to buy close to their jobs and family, so they’ve invested instead.
They are certainly all taxpayers who live in the wider economy, where the large amounts households have to spend on housing costs drags down spending in other areas and economic activity. And I am sure that the ‘mum and dad’ investors would be horrified at the idea that they are locking other mums and dads, with young families, out of home ownership.
Property investors have made decisions about their finances, and financial futures based on current tax rules so I’m not suggesting we pull the rug out from under them, current arrangements can be grandfathered out.
We can make a sensible transition from a tax system that encourages losses and speculation, to one which encourages sensible investment and secure home ownership. At some point, and soon I hope, we have to say enough is enough, we can’t let this go on any longer. I
f we don’t fix the tax loopholes around housing investment, then a generation of people will be locked out of home ownership, with repercussions for the rest of the housing system. Consensus at the tax forum seemed to be that tax reform is hard, and it is, but a generation of housing haves and have nots has more serious consequences for Australia’s future fairness, and so to the 1.6 million investors, from one tax man to another, how about we fix this thing?
This blog post appears on the National Times in an extended version
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