Labor ‘looking at issues’ around housing, minister says in Capital Gains Tax

Finance Minister Katy Gallagher has hinted at possible tweaks to the capital gains tax as Labor looks at “issues” blocking young people from getting on the property ladder.

The Albanese government last year ruled out changes to negative gearing but did not rule out tinkering with the CGT discount.

Senator Gallagher on Wednesday loosened the official line even further.

“Look on capital gains, there’s people that would like to get rid of it, there’s people who want to keep it, and there’s people in the middle,” she told Nine’s Today.

“We are interested in looking at some of the issues that face younger people in housing and things that prevent them from being able to get into the housing market.

“The Treasurer and the Prime Minister have been clear on that, and we’ll consider those in the lead-up to the budget.”

CGT is paid on the profit made when an asset sold has increased in value.

But there are two key concessions.

The first is an exemption for family homes in which property owners selling their main residence are typically exempt from the tax.

The second, and more controversial concession, is a 50 per cent discount for property owners who hold an investment for more than 12 months.

Critics argue the discount makes property too attractive to investors and stacks Australia’s supply-starved housing market against first-home buyers, especially when combined with negative gearing, which lets investors deduct rental losses from their salary.

Opposition treasury spokesman Tim Wilson has dismissed the proposed reforms as a “revenue measure”, arguing it would not improve housing supply.

“We’ve now had a shocking acknowledgment that increasing taxes isn’t going to increase or incentivise new housing to be built. Duh,” he said on Sky News.

“The reality is we’ve all known that, Labor’s just using this as a revenue measure because they want more control over Australians lives.”

Mr Wilson said any costs imposed on investors would simply be passed onto renters.

Appearing on Nine’s today, Greens finance spokesman Nick McKim said a parliamentary committee on CGT that he chaired had been told the tax “needs to be reined in”.

He said it was a “tax break that overwhelmingly favours the top 1 per cent in this country, and it’s driving a housing affordability crisis which is flowing through into rents”.

“But it’s also driving a tax system that is really, really unfair, particularly for young people,” Senator McKim said.

“So if (Treasurer) Jim Chalmers wants some budget savings, I’ve got $22bn a year worth of budget savings for you here, Jim.”

Nationals senator Matt Canavan took a different view.

Appearing opposite Senator McKim, Senator Canavan said changes to CGT would be an “inflation tax”.

“This is the government saying that inflation’s high. We’ve got the highest inflation rate in the developed world, and so they’ve got an opportunity here to tax you on gains in asset values that are just due to inflation,” he said.

“If we want to give the Australian people a break, it’s about time the Australian government tightens its belt.”