The Capital Gains Tax discount will cost the federal budget $247 billion over the next decade, according to new Parliamentary Budget Office analysis.
The figures, commissioned by the Greens-led Select Committee into the Operation of the CGT Discount, show the tax measure’s cost is accelerating – exceeding the $205 billion it has cost across its entire 25-year history.
The analysis also found the richest 1 per cent of income earners will receive 59 per cent of the benefit from the CGT discount this financial year, up from 54 per cent in previous analysis.
Meanwhile, just 4 per cent of the benefit goes to Australians under 35.
Greens Economic Justice spokesperson Senator Nick McKim said the discount had become “a quarter-trillion-dollar joke that overwhelmingly favours the super-wealthy.”
“It means that Australians who go to work each day pay double the tax than someone who earns the same amount flipping investment properties,” Mr McKim said.
“Instead of supporting productive investment, the CGT discount is now overwhelmingly used to subsidise speculation on existing properties, driving up prices and making home ownership even more difficult for renters.”
Greens Housing spokesperson Senator Barbara Pocock linked the tax settings to broader housing affordability pressures.
“Negative gearing and the capital gains tax discount let cashed-up investors outbid everyday Australians – and young people are the ones paying the price,” Ms Pocock said.
The Greens are calling for the discount to be scrapped, arguing Labor should redirect the savings toward social and affordable housing construction.
The Organisation for Economic Co-operation and Development noted Australia’s housing situation in its latest report, pointing to tax settings as partially responsible.
“Removing some of the favourable tax treatment of residential property ownership, including capital gains tax concessions and negative gearing, would help to cool demand and could help to mitigate upward pressure on house prices,” the OECD said.
Independent economist Chris Richardson said reducing the discount to 33 per cent would likely lead to a 1.5 to 2 per cent fall in house prices.
“It would unwind two months of 2025’s growth in housing prices,” he said.
“That’s far from nothing. Yet, it is neither apocalyptic nor revolutionary.”
The federal government has not announced any plans to review the CGT discount.
