Negative Gearing helps many: Hockey
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This article was sourced from SBS
Joe Hockey isn't about to soothe the Reserve Bank's concerns over negative gearing.
The central bank believes negative gearing should be reviewed with other housing-related tax concessions that could be fuelling speculative investment in housing.
RBA governor Glenn Stevens has previously labelled the steep price rises in Sydney and Melbourne as "crazy".
But the treasurer is sticking with his opposition to making changes, saying there is a lot of misinformation about negative gearing.
He says there are some 900,000 people who earn less than $80,000 that negatively gear property, more than double the number of those earning more.
"This is a way for people on medium incomes or even lower incomes to be able to get into the property market," Mr Hockey told 2UE radio on Thursday.
Mortgage Choice boss John Flavell agrees, and believes similar concessions should be given to first home buyers that are given to investors.
"If we want to improve housing affordability and help more first home buyers in the market, we have to pull on the right levers," Mr Flavell says.
But negative gearing is another issue that the government has effectively ruled out from what is supposed to be a broad-based review of the tax system.
The government has also said it will never make changes to superannuation tax concessions and won't be leading the charge to lift the GST rate or broaden it base, leaving that to the states to pursue as they are the beneficiaries of GST revenue.
"Joe Hockey has called for a mature debate about tax reform and then ruled out most tax reform," shadow treasurer Chris Bowen told ABC radio.
"He is all hot air when it comes to tax reform."
However, the Labor Party does not agree with making changes to the GST either.
Tax Institute president Stephen Healey believes any serious conversation on tax reform needs to put the GST and state tax reform at its centre.
"The time for inter-governmental platitudes has passed and it is time for both federal and state governments to seriously consider broadening the base and increasing the rate of the GST," he says.
The Business Council of Australia says a successful outcome to the tax review will require keeping all options on the table, but it will also require a level of bipartisanship that has not been seen "for a long time".