While the Murray Inquiry’ Interim Report into the financial system has dropped the ball on banking sector regulation and support, as explained in great detail by Houses & Holes, it does at least make some sensible observations on Australia’s superannuation system (outlined here) and housing-related tax policy.
On tax policy, the Interim Report explicitly highlights that the combination of high tax rates on savings, as well as tax generous concessions like negative gearing and capital gains tax discounts, has made investment into housing a relatively attractive proposition. In turn, Australia’s tax settings have created a level of demand for housing that is higher than it otherwise would be, resulting in too much of the nation’s capital being tied-up in housing at the expense of productive of the economy – a view shared by MacroBusiness.
