Brotherhood Comment November 2009

ISSN 1320 8632A regul Ar upd Ate from the r ese Arch And policy centreNovember 2009Opening the door to housing tax reformIn a recent speech Treasury She also finds that individual geared property investors in the Secretary Ken Henry, the head property investors benefit top income quintile are getting on of the government’s review panel significantly from being able to average $4500 from tax benefits on taxation, highlighted the fact combine tax deductibility of debt in relation to their investment that the majority of Australians’ interest (or negative gearing) and a properties. However, people from household wealth is invested in 50 per cent discount on tax paid on the poorest households who receive property, with 44 per cent of the capital gains. These tax concessions the top rate of Commonwealth total invested in their own home provide an overall benefit of Rent Assistance gain an average and 16 per cent in other property around $5.4 billion each year. subsidy of just $2420 a year.(Henry 2009). He also commented that this enormous amount of And when the distributional benefit The housing assistance is also wealth is either not taxed at all of this assistance is considered, unevenly distributed across (in the case of owner-occupied the findings are quite stark. For age groups, with older outright housing), or moderately taxed households in the top 20 per cent owners benefitting the most, at the (in the case of other property). of incomes, the average ...