Alert and more than a little alarmed
With a GST-centred tax reform package now politically dead in the water, the storm clouds are gathering for the property industry.
We know that changes to negative gearing are now firmly in play.
Tinkering with negative gearing would be risking a part of the economy that is growing and creating needed jobs. Changing this 100-year-old part of the tax system would impact investment decisions for new housing and infrastructure.
This looks like a policy idea dreamt up by a focus group rather than Treasury.
By changing the attractiveness of investment – you lose investment, and this results in a hit on jobs, growth and housing supply.
We are reminding the government that two million Australians own an investment property. These are mums and dads who see an investment property as a way of securing their long-term prosperity.
Plus some 440,000 negatively geared property investors live in marginal seats for the government and opposition – enough voters for these seats to change hands many times over.
At a state level, premiers and chief ministers have seen a legitimate debate cut off at the knees. Expect to hear more from them as they seek to meet the increasing needs of the health and education systems.
The property industry already pays more than its fair share of tax.
Real estate specific taxes account for nine per cent of Australia's total tax take, compared to an OECD average of just five per cent.
In fact, this industry pays a whopping $72 billion dollars in tax. That's 16 per cent of taxes from an industry that makes up 11.5 per cent of GDP.
Now is not the time to tinker with a part of the economy that is working well.