Prime Minister Tony Abbott rules out changes to negative gearing
Prime Minister Tony Abbott has ruled out changes to negative gearing, saying the government does not want to kick off the tax reform debate with increasing taxes.
Asked whether he would rule out changes to negative gearing, following an Australian Council of Social Service report that called for the tax break to be restricted, Mr Abbott said: “Yes”.
The government I lead wants taxes to be lower, simpler, fairer
“The thing that worries me about so many of the contributions to our national conversation is that in the end they’re all about increasing taxes,” he said.
While he was supportive of “closing loopholes and ending anomalies” to try and make the tax system fairer, this would not include major changes to the popular tax break used by millions of Australians.
“The government I lead wants taxes to be lower, simpler, fairer,” Mr Abbott said.
ACOSS has called for changes to both negative gearing and CGT, saying that wealthy people should stop being able to claim deductions against investments which aren’t making actual losses, but ‘on paper’ losses.
To stop this happening, ACOSS proposes that the deductions are quarantined, in the same way they were under the Hawke government back in the 1980s.
The revenue savings from changing negative gearing, could be over $1 billion a year, while savings from changes to CGT could be as much as $5 billion, depending on what is implemented.
Despite Mr Abbott and Mr Hockey previously saying that “everything will be on the table” for tax reform, Mr Abbott on Thursday told reporters there were no plans to increase taxes.
“I would say to the people who are running around looking to increase taxes on people, what we really need to do is to get our spending under control,” Mr Abbott said.
“Australia does not have a problem with taxes being too low; Australia has a problem with spending being too high because of the excesses of the former government.”
ACOSS chief Cassandra Goldie said: “If the Government rules out changes now, what was the point of the so-called tax Discussion Paper? Is the discussion about negative gearing and capital gains over already?”
Tax Office data shows that the country’s 1.3 million landlords claimed almost $14 billion in tax losses that offset the tax owed on their other income. While the the largest band of beneficiaries – by both number of taxpayers and dollar quantum of deductions – earn incomes between $30,001 and $80,000, higher income earners are able to claim the biggest “losses”, and in addition to capital gains tax (CGT) concessions, benefit from bigger tax breaks against their total income.
The ATO data shows the average loss made per property in 2011-12 was $10,894, but this loss more than doubled for people earning over $180,000 to $22,772.
The property industry hit back at calls to abolish negative gearing. HIA’s executive director of industry policy Graham Wolfe said restricting access to negative gearing for residential property would reduce investment in housing. He said abolishing stamp duty on residential property should be the top priority for housing-related tax reform.
Mr Abbott said the upcoming federal budget would include the already planned small business tax cut. There will no longer be a levy of 1.5 per cent placed on business to fund Mr Abbott’s now defunct paid parental leave scheme.
But at the same time, the 1.5 per cent reduction read full article here
source- Sydney Morning Herald
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