Labor s tax policy a 32 billion risk

Labor’s tax policy a $32 billion riskChanges to negative gearing and capital gains tax, put forward in Labor’s tax reform policy, risk jobs, rents and the economy, says the Property Council of Australia.Labor’s policy, unveiled by Bill Shorten on Saturday, proposes to limit negative gearing to new housing from 1 July 2017. Taxpayers would still be able to deduct net rental losses against their wage income, provided the losses come from newly constructed housing. All investments made before 1 July 2017 would be fully grandfathered.Mr Shorten has also announced that, if elected, Labor would halve the capital gains discount for all assets purchased after 1 July 2017. This policy would reduce the capital gains tax discount for assets that are held longer than 12 months from the current per cent to 25 per cent. Investments made before this date would not be affected.Prime Minister Malcolm Turnbull has said Labor’s policy is “likely to really distort the housing investment market, so it is not a well-designed policy” and fails to “provide any budgetary relief, at least any time soon.”Treasurer Scott Morrison has said that Labor’s policy would drive investors into the new housing market, making it harder for “everyday mum and dad investors” to buy new houses or units off the plan.Analysis from the Property Council has found that 840,000 of the one million Australians who negatively gear earn less than $80,000 a year. This includes 53,800 teachers, 52,000 retail workers, 35,900 nurses and midwives, 22,600 hospitality workers and 10,400 emergency services workers.A Property Council state by state analysis of negative gearing around the country has revealed widespread use of negative gearing by Australians in the outer suburbs of our cities and in regional centres. Hot spots include Campbelltown, the Central Coast, Mackay, Gladstone, Launceston, Werribee, Ballarat, Canning Vale and Mount Gambier. Property Council chief executive Ken Morrison has called Labor’s policy a “risky intervention” in housing markets “at a time when supply is meeting demand for the first time in a decade and prices are slowing.”Morrison says halving the capital gains tax discount would damage new housing supply, even considering changes to negative gearing.”You can’t increase taxes on housing by $32 billion and not affect rents, housing construction or prices.”The big risk is investors simply walking away from property – drying up supply at the time we need it most.”This policy will put rents at risk, risk jobs and make it so much harder for families to plan their economic futures.”More industry reaction to Labor’s tax policy can be found here.