Negative gearing is not evil
That’s the message of Deloitte Access Economics’ latest Mythbusting Tax Reform report, released on Monday.
Negative gearing is neither a “tax loophole that should be closed”, nor is it “driving property prices through the roof”, the report finds.
Instead, it’s a legitimate and longstanding part of the tax system used by everyday Australians looking to get ahead.
On Sunday’s Insiders program on ABC TV, Assistant Treasurer Kelly O’Dwyer pointed out that “average income earners largely are the people who get to take advantage of negative gearing.”
And she’s right.
The ATO’s own data shows that 840,000 clerical staff, teachers, tradies, nurses, cleaners and emergency services workers use negative gearing – and these people are hardly property barons.
Negative gearing has been in place for 100 years and can’t be blamed for last week’s auction results – or next week’s.
Recent cooling in the Sydney and Melbourne markets has nothing to do with changes to tax policy – and everything to do with new housing supply coming onto the market and finally taking the pressure off prices.
And that’s why it’s so important to sustain a strong level of new housing construction if we are to tackle housing affordability over the long term.