Rob Burgess from The New Daily has written a ripper article today dissecting the political economy surrounding Labor’s proposal to reform negative gearing and the capital gains tax discount, which he argues is a battle between rent-seekers and ordinary taxpayers:
The biggest losers under Labor’s plan would be the rent-seekers, powerful interests able to earn and politically protect returns above free market rates.
These include the banks, insurance companies, real estate firms, financial advisers, mortgage brokers, and a heap of smaller related occupations…
These industries will lobby the government, and the voting public, to leave the laws unchanged…
The point of Labor’s reforms is to remove a market distortion that has seen house prices in Australia rocket ahead of incomes, pushing many young families into financial stress without increasing housing supply.
That’s the important point to remember in this debate. The $3000 tax refund [from negative gearing] that a punter might receive this year does not appear magically from nowhere – it’s an income tax reduction that the vast majority of taxpayers don’t receive…
For rent-seekers, though, it must be held in place along with the capital gains tax concession – not for all those three-grand tax refunds, but to continue pumping up credit growth in the banking system…
What is at stake is not $3 billion in tax refunds. It’s the continued growth of a complex web of industries that turn people into interest-streams, and take large salaries and shareholder returns along the way.
They are the rent-seekers and their interests are at odds with those of the majority of taxpayers and the new generation of would-be home-owners who can’t afford to get into the market.
Absolutely spot on. The Australian people and the Coalition are being hoodwinked into supporting a system that benefits the parasitic property industry at the expense of ordinary Australians.
I highly recommend that you read Burgess’ full article here.
