When panellests were asked to find an extra A$20 billion per year to fund government priorities like building nuclear submarines and responding to climate change, Australia’s top economists overwhelmingly back land tax, increased resource taxes, an attack on negative gearing and extending the scope of the goods and services tax.
Efficiency picks:
Wind back superannuation tax concessions
Wind back deductions for negatively geared properties
Wind back the capital gains exemptions on the family home
Equity picks:
Wind back the capital gains exemptions on the family home
Wind back superannuation tax concessions
Wind back deductions for negatively geared properties
Efficiency comments:
The housing sector:
The tax structure and regulatory environment of the housing market in Australia is complex and runs across all three levels of government. It is for this reason that policy options must be part of a well-designed tax policy mix. Deductions and capital gain exemptions are the domain of the Federal Government.
Despite billions of dollars foregone by taxpayers due to our current tax deductions and capital gain exemptions, our housing stock is not meeting the needs of our society.
There should be housing related deductions and exemptions that provide attractive investment options for individuals, but they must lead to a net increase in the supply of energy-efficient and affordable housing.
It is also the case that some exemptions to capital gains are very costly to the budget, and in addition, it is unclear that they lead to the correct outcome. For example, fully exempting capital gains on the main residence is regressive and there is no clear evidence (internationally) that suggests they raise homeownership rates (OECD).
Stamp duties affect residential and labour mobility (OECD). While the federal government cannot directly raise funds by lowering stamp duty taxes and introducing urban land taxes, incentives for a nationally consistent approach that moves towards this model should be explored.
Superannuation:
Through our superannuation we own shares in national and international big tech and manufacturing companies, banks, real estate and more.
Our savings in super, even if small, earn the same rate of return as those of big investors. Australia is a world leader in this area. Very few countries have well-designed systems that allow an aging population to support their financial needs in retirement. Super will benefit future generations of taxpayers by lowering the budget costs of the pension system.
The budget forgoes billions due to super tax concessions. This is not a problem in itself; however, it is a problem if superannuation becomes a conduit to divert earnings to avoid paying taxes. Tax concessions need to be proportional to the balance in the account.
Equity comments:
The housing sector:
The tax structure and regulation of the housing market in Australia is complex and all three levels of government are part of the mix. It is for this reason that policy options must be part of a well-designed tax policy mix. Deductions and capital gain exemptions are the domain of the federal government.
The beneficiaries of the current design of deductions, via negatively gearing investment properties, are much more likely to be people with above median income.
In 2019?20, 79% of the tax reduction went to people with above median income (Treasury, based on ATO data). These deductions benefit people across most age groups, including a substantial share in the 30 to 59 age range, which is why we want to maintain the attractiveness of investing in housing.
However, it is imperative that we do this in a way that it increases the supply of housing (including social housing). Deductions and exemptions (e.g. capital gain) should encourage the supply of new, energy-efficient housing, and promote efficiency in the use of the existing housing stock to have the greatest impact on housing affordability.
Equity is improved by using recurrent taxes based on updated property values. While the federal government cannot directly raise funds by lowering stamp duty taxes and moving to taxing urban land, incentives towards this tax option could be explored.
Stamp duty affect residential and labour mobility (OECD), and therefore low and middle-income, and younger workers are disproportionally affected.
Superannuation:
Through our superannuation we own shares in national and international big tech and manufacturing companies, banks, real estate and more. Our savings in super, even if small, earn the same rate of return as those of big investors.
Very few countries have well-designed systems that will allow an aging population to support their financial needs in retirement. Concessional taxation of superannuation contributions in its present form benefits more people above the median income. In 2019-2020, 30% of the benefit went to people in the top income decile.
The flat 15% rate of tax is a larger concession on superannuation contributions for high income earners in the higher tax brackets. This is even more skewed when we consider concessional taxation of superannuation earnings (Treasury based on ATO data).
Responses (1)
How economists would raise $20 billion per year
Poll 58
When panellests were asked to find an extra A$20 billion per year to fund government priorities like building nuclear submarines and responding to climate change, Australia’s top economists overwhelmingly back land tax, increased resource taxes, an attack on negative gearing and extending the scope of the goods and services tax.
Photo credit by Joshua Hoehne on Unsplash
Efficiency picks: Wind back superannuation tax concessions Wind back deductions for negatively geared properties Wind back the capital gains exemptions on the family home Equity picks: Wind back the capital gains exemptions on the family home Wind back superannuation tax concessions Wind back deductions for negatively geared properties
Efficiency comments: The housing sector: The tax structure and regulatory environment of the housing market in Australia is complex and runs across all three levels of government. It is for this reason that policy options must be part of a well-designed tax policy mix. Deductions and capital gain exemptions are the domain of the Federal Government. Despite billions of dollars foregone by taxpayers due to our current tax deductions and capital gain exemptions, our housing stock is not meeting the needs of our society. There should be housing related deductions and exemptions that provide attractive investment options for individuals, but they must lead to a net increase in the supply of energy-efficient and affordable housing. It is also the case that some exemptions to capital gains are very costly to the budget, and in addition, it is unclear that they lead to the correct outcome. For example, fully exempting capital gains on the main residence is regressive and there is no clear evidence (internationally) that suggests they raise homeownership rates (OECD). Stamp duties affect residential and labour mobility (OECD). While the federal government cannot directly raise funds by lowering stamp duty taxes and introducing urban land taxes, incentives for a nationally consistent approach that moves towards this model should be explored. Superannuation: Through our superannuation we own shares in national and international big tech and manufacturing companies, banks, real estate and more. Our savings in super, even if small, earn the same rate of return as those of big investors. Australia is a world leader in this area. Very few countries have well-designed systems that allow an aging population to support their financial needs in retirement. Super will benefit future generations of taxpayers by lowering the budget costs of the pension system. The budget forgoes billions due to super tax concessions. This is not a problem in itself; however, it is a problem if superannuation becomes a conduit to divert earnings to avoid paying taxes. Tax concessions need to be proportional to the balance in the account. Equity comments: The housing sector: The tax structure and regulation of the housing market in Australia is complex and all three levels of government are part of the mix. It is for this reason that policy options must be part of a well-designed tax policy mix. Deductions and capital gain exemptions are the domain of the federal government. The beneficiaries of the current design of deductions, via negatively gearing investment properties, are much more likely to be people with above median income. In 2019?20, 79% of the tax reduction went to people with above median income (Treasury, based on ATO data). These deductions benefit people across most age groups, including a substantial share in the 30 to 59 age range, which is why we want to maintain the attractiveness of investing in housing. However, it is imperative that we do this in a way that it increases the supply of housing (including social housing). Deductions and exemptions (e.g. capital gain) should encourage the supply of new, energy-efficient housing, and promote efficiency in the use of the existing housing stock to have the greatest impact on housing affordability. Equity is improved by using recurrent taxes based on updated property values. While the federal government cannot directly raise funds by lowering stamp duty taxes and moving to taxing urban land, incentives towards this tax option could be explored. Stamp duty affect residential and labour mobility (OECD), and therefore low and middle-income, and younger workers are disproportionally affected. Superannuation: Through our superannuation we own shares in national and international big tech and manufacturing companies, banks, real estate and more. Our savings in super, even if small, earn the same rate of return as those of big investors. Very few countries have well-designed systems that will allow an aging population to support their financial needs in retirement. Concessional taxation of superannuation contributions in its present form benefits more people above the median income. In 2019-2020, 30% of the benefit went to people in the top income decile. The flat 15% rate of tax is a larger concession on superannuation contributions for high income earners in the higher tax brackets. This is even more skewed when we consider concessional taxation of superannuation earnings (Treasury based on ATO data).