Reform Negative Gearing & Capital Gains Discount?
Many have tried (and failed) to reform the Australian tax system to make it fairer in relation to housing. Open democracy opens the door to real reform.
Negative gearing remains a politically sensitive issue in Australia, viewed as either an untouchable policy or a necessary reform to improve housing affordability.
In 2024, proposed changes to negative gearing and capital gains tax briefly resurfaced, gaining tentative support from several Labor MPs before being quickly shut down by Prime Minister Anthony Albanese.
Negative gearing allows property investors to deduct rental losses from their taxable income, while capital gains tax concessions reduce the tax paid when selling investment properties. Critics argue these policies inflate housing prices and favour investors over first-home buyers.
The swift rise and fall of the discussion revealed the deep political caution surrounding these tax settings. Despite the attention, there was little detail on what reforms might actually involve. The episode highlighted how difficult it remains to have meaningful policy debate on housing when the politics of fear and electoral risk continue to dominate the conversation.
Open democracy provides the platform to revisit the issue in a constructive way, starting with revealing how changes introduced by the Howard government created, in effect, a housing ponzi scheme.
On September 20, 1999, John Howard discontinued indexation of the cost base and introduced a 50 per cent discount on the capital gain for individual taxpayers. The product of the decision was the creation of a Ponzi scheme where the fastest way to a quick buck was through capital gains on housing as the video below explains.
Have your say ...
It is time to end the housing ponzi scheme that is making the dream of owning your own home unattainable for an increasing number of Australians? (AGREE/DISAGREE)
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Reform Options
The following options are put forward as a way of stimulating debate and discussion on a critically important issue the major political parties refuse to discuss.
From these initial discussions, other options will emerge leading to real and sustainable solutions to the housing crisis in Australia.
Abolishing vs. Maintaining Negative Gearing?
Abolishing vs Maintaining Capital Gains Discount?
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About PByT Surveys & Open Democracy
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