Your are Living in ‘Fantasy World’ if you Change Negative Gearing

Tuesday, February 23rd, 2016
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Malcolm Turnbull has accused Labor of living in a “fantasy world” for believing its proposed negative gearing changes won’t have an impact on house prices.

But Newspoll, suggests voters back limiting negative gearing to newly-constructed properties.

More voters (47 per cent) than not (31 per cent) gave the policy the thumbs-up.

That didn’t top the prime minister having another crack at the idea that he argues will hit house prices.

“We know that there would be nothing more damaging to confidence and growth than smashing housing prices,” Mr Turnbull told parliament.

Shadow assistant treasurer Andrew Leigh dismissed that argument while avoiding questions about whether Labor had done any specific modelling.

“We will continue to see house price growth, but you won’t see that gap between house price growth and wage growth,” he said.

Opposition Leader Bill Shorten said Mr Turnbull had no modelling to back up his claim that house prices would fall under Labor’s negative gearing change.

“Mr Turnbull thinks it’s for very wealthy investors to acquire taxpayer support to get their fifth, sixth and seventh houses,” he told reporters in Canberra.

The Property Council – which has launched an advertising campaign promoting the benefits of negative gearing to the Australian economy – also opposed reports the government may cap the amount negatively-geared investors can claim against their tax obligations.

“There is a risk with both options,” chief executive Ken Morrison said.

Shadow treasurer Chris Bowen hit back saying he had no problem with industry advertising self-interest, “but it should be based on facts”.

Labor also plans to reduce the capital gains tax discount from 50 per cent to 25 per cent, a proposal Mr Turnbull says would result it being higher than any comparable country.

“What they are saying is if you come to Australia to invest, seeking to make a capital gain, you will pay more tax than anywhere else,” he said.

“That’s really going to create jobs, isn’t it? That will drive jobs away.”

Mr Bowen asked the prime minister in parliament whether he could rule out any change to capital gains tax.

“Increasing capital gains tax is not part of our thinking whatsoever,” Mr Turnbull replied.

Treasurer Scott Morrison said the tax debate wasn’t about who could raise the most even if the opposition thought it was.

“We are not in that race, we are into lower taxes and lower spending,” he told parliament.

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