The Australian Greens have today released Parliamentary Budget Office costings that show removing structural unfairness in the tax system through the discount on Capital Gains Tax (CGT) could generate as much as $74 billion over the next ten years, rising to $127 billion when negative gearing reforms that have warped the housing market are taken into account.
“Income earned in wages is fully taxed. Income earned from sale of assets like property or shares is 50% tax free. What is the justification for this, when nearly three quarters of the benefits of this concession go to the top 10% of income-earning households?” Australian Greens Senator Ludlam said.
The Parliamentary Budget Office Costings, released today by Australian Greens housing spokesperson Scott Ludlam and Treasury Spokesperson Adam Bandt MP, provide three models for reform of capital gains tax.
“The discount on capital gains tax and the use of negative gearing provide tax concessions for high income earners to accumulate more wealth, while wage earners are left behind, are locked out of the housing market and pay higher rents. It is profoundly unfair,” Senator Ludlam said.
“According to Treasury’s own figures, in the current financial year, the discount on capital gains tax will cost the nation $6.15 billion, making it our sixth biggest tax expenditure item.
“The PBO figures we requested show removing the discount would generate $10.2 billion over forward estimates. When you couple it with negative gearing, the impact on the budget is even more substantial. By reforming negative gearing and removing the discount on capital gains tax, upwards of $12.7 billion could be generated for our economy each year over the next decade, with flow on effects into the housing market, especially for first home buyers.
“This revenue would also deliver considerable benefits for people and communities around the country, through better funded services, including homelessness and housing affordability, as well as improved infrastructure, hospitals, schools, housing and public transport,” said Senator Ludlam.
"Australia doesn't have a budget crisis, but we do have a revenue crisis.” Greens Treasury spokesperson Adam Bandt MP said.
“Whenever anyone tries to have a sensible tax conversation, Joe Hockey will immediately disqualify issues like negative gearing or capital gains tax reform on the basis of political cowardice.
"If we are to fund the services that Australians rightly expect, the Treasurer needs to show some spine and put everything on the table, including capital gains tax reform, even if it might hurt the Liberal party base.
"Until the Treasurer is happy to talk about the CGT as well as the GST, we'll have a tax system that drives inequality and locks young people out of affordable housing."