“Reports in The Australian on ATO data show that almost two thirds of investors are on an average income of less than $80,000,” said HIA’s Principal Economist, Tim Reardon.
Independent research undertaken for HIA by The CIE concluded that increasing the tax on investing in residential homes will force up rental prices, worsen housing affordability and reduce economic activity.
The report backs previous research by Independent Economics in 2014 that modelled the impact of the Henry Tax Review Recommendations on negative gearing arrangements.
“Further restrictions on negative gearing will lower Australian living standards and increase the cost of renting a home,” added Mr Reardon.
“Changes to negative gearing would adversely impact on the housing market, exacerbating the current undersupply of housing and further reduce the efficiency of the housing market.
“This reduction in-house supply would also adversely impact on wage growth and GDP.
“Driving investors out of the market will force up the price of renting, as nearly 25 per cent of rental stock is provided by private investors.
“Further research in 2017 shows that, as the Federal Government increases Capital Gains Tax, they take two dollars of revenue away from the State Governments.
“At least $1 in every $10 of government revenue is raised from a tax on housing.
“The Henry Review recommendations on Capital Gains tax were clear that changes should not be made until the constraints on housing supply had been addressed.
“We cannot solve the affordability challenge by increasing the tax on housing or by further restricting those that invest in housing.
“The solution to housing affordability lies in less tax and less government involvement in housing than in additional constraints on investors.”