The Australian Greens are preparing to unveil the most ambitious plan yet to get young people into homes, costed at an extraordinary $51 billion.
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The $51 billion figure is a net saving to the budget rather than a cost, calculated over 10 by the Parliamentary Budget Office.
The three-point plan, Houses for Young People: Freeing up Investment Properties, would phase out the capital gains tax discount available to property investors over five years.
During the first year, the standard 50 per cent discount on capital gains tax would shrink to 40 per cent, to 10 per cent after four years and zero after five years.
Income from capital gains would be then be taxed at almost the same rate as income from other sources, except that the inflation component would be tax exempt, as it used to be before 1999 when the Howard government replaced the exemption with a 50 per cent discount.
Reverting to the original means of compensating investors for inflation would bring in an extra $2.75 billion over four years and $16.1 billion over 10 years.
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It would make property investment and speculation less attractive, winding back the competition faced by owner-occupiers at auctions.
The plan would also end negative gearing for all new property purchases. Businesses would continue to be able to negatively gear non-property investments.
Landlords would continue to able to write off property investment costs against property investment income, but not against salaries and other income.
His part of the plan would bring in $2.4 billion over four years and $34.5 billion over 10 years.
The third leg of the plan would limit existing negative gearers to one property. Only 583,000 out of Australia's 1.5 million property investors invest in two or more investment properties.
The deductions available for second or more properties would shrink by one-fifth each year until reaching zero after the fifth year.
The limit would bring in an extra $100 million in tax revenue in the first four years and $1.3 billion over 10 years.
Launching the plan on Saturday, Greens leader Richard Di Natale will say it is "time to dismantle the rigged system that privileges investors and landlords over everybody else".
"Australia is facing a housing crisis. Everyone needs a home where they can feel secure, live comfortably and be part of the community," his speaking notes say. "But this is becoming increasingly difficult for millions of average Australians."
Greens Treasury spokesman, senator Peter Whish-Wilson will say the government has "rigged the tax system to favour wealthy people".
"Negative gearing and capital gains tax discounts have driven house prices sky high, making it easier for wealthy people to buy more homes and harder for first home buyers," he will say. "At the same time, stamp duty raises the price of homes and stops people from moving house, even when they're ready to downsize."
The Greens will also push the Commonwealth government to back state governments that replace stamp duty with land tax.
The plan goes further than the one Labor took to the election that retained negative gearing for all pre-existing investors, no matter how many properties they geared.
Labor proposed halving the capital gains tax discount from 50 per cent to 25 per cent rather than abolishing it and replacing it with indexation.
In the budget Treasurer Scott Morrison wound back some of the excesses of negative gearing by withdrawing deductions for things such as the cost of travel to inspect rented-out properties.
- The Age
