Labor pledges not to touch negative gearing, capital gains as pressure mounts

Treasurer Jim Chalmers said this week that the government is not considering changes to negative gearing or capital gains amid mounting pressure from the Greens urging the government to address housing affordability.

Speaking to Sky News, Mr Chalmers said: “No, that’s not something that we’re proposing, not something that we are considering, not something that we are working up.”

Amid heightened attention on housing affordability, the Greens are advocating for a restriction on negative gearing rules, proposing a limit to a single investment property.

However, Mr Chalmers said the government is not prepared to go there.

“We’ve got, I think, a very broad and very ambitious housing agenda, and we’ve got a pretty full book when it comes to tax reform, and our focus is on legislating that, not just our cost‑of‑living tax cuts for middle Australia, but also changes to the PRRT, changes to superannuation tax concessions; we’ve got a whole multinational tax agenda, issues around compliance, cleaning up after the PwC scandal. There’s a whole bunch of tax reform underway,” the Treasurer said.

“That’s our focus. Our opponents and others want to focus on the things we haven’t proposed because they can’t defend their position on the things that we have proposed.”

Denying that changes to negative gearing would be “too politically difficult”, Mr Chalmers said, “We’ve found a whole bunch of other ways to support the housing market and try and build more homes.”

On capital gains, he added: “It’s not something that we’re considering.”

“It’s not something that we’re proposing, it’s not something that we’re working up. And the reason why I think you’re asking me about this, the reason why our political opponents make such a big deal of this is because they would rather us talk about what we are not proposing, because they can’t defend their position on what we are proposing.”

The opposition has intensified its scrutiny of Labor, probing into potential future tax changes, after the government made substantial changes to the already legislated stage three tax cuts.

Shadow treasurer Angus Taylor told ABC’s Insiders over the weekend that the opposition knows the government is contemplating changes to negative gearing and capital gains.

“Their answers in the Parliament this week were very wishy-washy,” he said.

Last week, AMP’s chief economist, Shane Oliver, argued that any changes to negative gearing would actually create a distortion and could make the issue around property affordability worse by reducing the supply of rental property.

Capital gains, on the other hand, Dr Oliver admitted, is potentially excessive and could use a revision.

“There is a case to consider removing the capital gains tax discount and return to the pre-1999 approach of adjusting capital gains for price inflation,” he said.

Labor’s previous negative gearing and capital gains tax policies are believed to have cost them the election in 2019. Back then, Labor was proposing to halve the 50 per cent capital gains tax deduction and limit negative gearing to new properties only.