NSW Planning Department gets it wrong on capital gains tax appeal

The Property Council of Australia today reminded all governments that a better deal – not higher taxes on new housing – is the answer to the challenges of housing affordability.

The NSW Planning Department recommended increasing the capital gains tax on investment property in a submission to the major federal inquiry into affordability and housing supply chaired by MP Jason Falinksi.

Chief Executive Ken Morrison said proposals to increase the capital gains tax for housing investments go against the evidence and reduce supply when we need it most.

“This submission from the NSW Planning Department is completely flawed – raising housing taxes is not the answer to housing affordability,” Mr Morrison said.

“Housing affordability is a big challenge in many parts of the country, but it is not driven by real estate investors who are not a large part of the current market.

“The increase in the capital gains tax would reduce the incentive to invest at a time when NSW and the nation must build additional and more diverse homes.

“The same week the New South Wales government announced a major economic stimulus package, it is baffling to read suggestions that the NSW Planning Department is asking another level of government to institute higher taxes on housing investments.

“These comments are an unfortunate distraction from the central duty of the NSW Planning Department. The ministry must focus on closing the growing shortage of 54,000 homes in New South Wales before international borders reopen and population growth resumes.

“We strongly encourage all governments to prioritize ways to increase the supply of badly needed housing through the provision of properly zoned land, efficient approvals and strategic investments in infrastructure. “

Mr Morrison said the most comprehensive modeling of old federal labor policies undertaken by Deloitte Access Economics showed that increasing the capital gains tax and removing the negative gear would hurt the economy and would cost jobs.

“The old Labor Party policy would have caused a $ 766 million blow to construction, a $ 1.6 billion drop in GDP, cost jobs and make little difference to housing affordability. These are not the political solutions Australia needs.