Findings released today from the International Monetary Fund (IMF) align with existing research from the Australia Institute that tax concessions are distorting Australia's housing market.
The IMF noted that "tax breaks, including from capital gains tax discount and superannuation concessions, could be phased out to generate a more equitable and efficient tax system".
Supporting the view of the IMF, Australia Institute research has shown that:
- The capital gains discount combined with negative gearing has distorted the housing market and contributed to the decline in home ownership rates over the past 25 years.
- The capital gains tax discount and the superannuation concession cost the government nearly $65bn in foregone revenue this year.
- According to the most recent data, 82% of the capital gains tax discount and close to half (44%) of the superannuation concession go to the richest 10% of Australians.
- Australia needs greater public housing. The IMF agrees, arguing for "expanding public and affordable housing, and reevaluating property taxes (including tax concessions to property investors)".
"The IMF has just confirmed what everyone knows - the tax concessions on superannuation and the capital gains discount make Australia less fair and should be reformed," said Greg Jericho, Chief Economist at The Australia Institute.
"The capital gains discount and negative gearing have distorted Australia's housing market for a quarter of a century.
"As a result, home ownership rates are declining as fewer and fewer people can afford to buy a house.
"Reforming these tax concessions would allow more Australians to realise their ambitions of owning a home and make Australia a fairer country."
