PM Compares Labor's Negative Gearing Changes To Failed Mining Tax
Prime Minister Scott Morrison says Labor's plan to limit tax breaks for negative gearing will take a "sledge hammer to people's home values" and will have a short shelf-life like their mining tax.
Morrison has compared the policy -- with a proposed limit to negative gearing tax breaks for new homes and a reduction in the capital gains tax discount -- to Labor's failed mining tax.
"Labor never get this right, they tried to put on a mining tax at a time when the mining industry was starting to decline and now they think a housing tax is the right time to be introduced when the housing market is soft," he told Ten Eyewitness News.
The Minerals Resource Rent Tax came into effect on July 1, 2012. It was a 22.5 per cent tax on the profits of iron ore and coal projects, but only applied to profits over $75 million.
"Political debate about resource taxes have been raging for decades... even if the mining tax is repealed, the need for a broader national debate about a fair return to society from exploiting Australia’s natural endowment remains," Damien Giurco and Kevin Morrison from UTS's Institute of Sustainable Futures wrote at the time.
The Abbott Coalition Government abolished the tax in 2014 after striking a compromise with the Palmer United Party (the Palmer United Party was de-registered in 2017)
Labor's Proposed Housing Plan
Labor has maintained a policy to cut the capital gains tax discount from 50 per cent to 25 per cent.
Labor says its negative gearing reform is aimed at shifting the incentive to the construction of new housing and argues the tax subsidies are largely used by high income earners to reduce the income tax they pay.
The policy would also "grandfather" negative gearing on existing property investments.
On Thursday, Morrison said that "one in five police officers negatively gears."
The Coalition leader also warned that Australia’s Triple-A credit rating is at risk under Labor’s proposed changes.
"We need more homes built and this would result in less homes being built," Morrison said.
This week, the peak body for the construction industry released a report which warned that Labor's pre-election plans would harm the construction of new dwellings.
Master Builder's Association commissioned modelling by Cadence Economics predicts a $11.8 billion hit to building activity and 32,000 fewer jobs.
Labor has since slammed the findings as "flawed" and says the modelling fails to take into account that under its policy.
Labor highlighted an admission by MBA that the research fails to consider that the Opposition's policy "grandfathers" existing negative gearing arrangements and that investors currently using the mechanism will not be affected by the proposed policy.
Shadow treasurer Chris Bowen said Labor was not planning to end negative gearing.
"This research does NOT model Labor's reforms to negative gearing," he said.
"Labor is not 'ending negative gearing' -- it's reforming it to ensure it works best for the economy and jobs by retaining it for new properties only."
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