Welfare group says negative gearing distorts market
AN Australian welfare body has called on the Federal Government to address negative gearing issues to improve housing affordability.
Australian Council of Social Service chief Cassandra Goldie said negative gearing was part of a wider tax problem the government needed to tackle in its tax white paper next year.
Dr Goldie's comments came after a Housing Industry Association -commissioned report, Economic Impacts of Negative Gearing of Residential Property, was released this week.
"Negative gearing distorts investment activity to favour speculative investment in housing and other assets funded by debt and puts upward pressure on house prices … (it) adds to the boom and bust cycle in housing," she said.
"The RBA may be forced to use higher interest rates to calm the housing market.
"ACOSS advocates for deductions for expenses relating to passive investments in housing, shares and other similar assets to be quarantined to offset income from those assets only, including capital gains, rather than all personal income as is currently the case."
While Dr Goldie supported HIA's call to abolish stamp duty, she criticised the group's pro-negative gearing stance.
When the research was released on Monday, HIA managing director Shane Goodwin said the removal of negative gearing would increase taxes and discourage investment.
"With an ageing workforce and future pressure on services, policy settings such as negative gearing that promote wealth creation and self-sufficiency in retirement should be promoted," he said.
Mr Goodwin said negative gearing was not the domain of wealthy investors, pointing to ATO figures that state 74% of taxpayers receiving rental income had a taxable income of less than $80,000.
- APN NEWSDESK