Changes to negative gearing will hurt investment and affordability: HIA
Industry lobby group the Housing Industry Association (HIA) has expressed concern at reports that changes to negative gearing might be back on the table, as the government looks at alternative taxation reform options to the GST.
“New housing is one of the most highly taxed sectors in the economy, and the removal of negative gearing would only make that situation worse and discourage investment,” said HIA chief executive Industry Policy and Media Graham Wolfe.
The HIA cited research by Independent Economics which concludes that restricting access to negative gearing for residential property hurts investment in housing, erodes affordability and pressures rents on the upside.
“Negative gearing promotes private investment in the rental market, both stimulating economic activity and taking the pressure off social housing and the public purse,” said Wolfe.
“With an ageing workforce and future pressure expected on publicly funded services, policy settings such as negative gearing that promote wealth creation and self-sufficiency in retirement should be promoted.
“It is important to remember that negative gearing is not the domain of so-called ‘wealthy investors’.”
He cited ATO figures which show that 79% of tax payers with a rental property declare a taxable income of less than $100,000.
“In fact, seven out of 10 tax payers with a rental property earn less than $80,000.”
“A body of independent research has been developed over a number of years that demonstrates categorially that negative gearing is a positive force for the Australian economy,” concluded Wolfe.
