The Federal Treasurer, in discussing the results of his UK research trip, has predictably ruled out taking any action which would affect the current negative gearing property investment tax break.
Mr Morrison’s message to voters was a reassuring as it’s ever been (to taxpayers who are negative gearing): Negative gearing will remain firmly and warmly settled in the too-hard basket, where its always been since Paul Keating attempted to tinker with it in 1985.
Mr Morrison’s predictable comments drew forth more predictable comments from the Opposition (advocating reform) and the Premier of the most populous state – NSW (housing affordability is a priority issue). Those advocating reform do so in the belief that negative gearing is contributing to housing price inflation, making home ownership less affordable for those entering the market.
Some Coalition backbenchers are backing Labor’s demand to curb the tax break in order to control the growth of house prices in capital cities.
But speaking in London, Mr Morrison said the policy would not work and again reinforced the Government’s position that changing negative gearing would make it harder to save for a house.
read more at abc.net.au
As to the Keating experiment, in March 2016, ABC’s fact-checking unit concluded (in the course of assessing statements by former Treasurer Joe Hockey) that the abolition of negative gearing in the 1980s was not a significant driver of either housing prices or rental values.
..high interest rates and the share market boom of the mid 1980s increased consumer demand for rental properties, encouraged existing investors to pass on high mortgage costs to renting consumers, and discouraged additional investors from investing in the rental property market.
While the rent increases in two cities did coincide with the temporary removal of negative gearing tax deductions, it is unlikely that change had a substantial impact on rents in any major capital city in Australia. Read the full article at abc.net.au