Liberal Minister Zed Seselja has hit back at shadow treasurer Chris Bowen after federal Labor announced a start date for its proposed changes to negative gearing.
Mr Bowen said on Friday that Labor would implement two reforms to property tax laws from January 1, 2020 – if it wins the coming federal election.
The changes include limiting negative gearing to newly built houses, and halving the capital gains tax exemptions on properties held for more than 12 months. They will apply only to investments made after January 1, 2020.
But Senataor Seselja, the Assistant Minister for Treasury and Finance, said the changes would be “economy wrecking” and suggested Labor “simply don’t care” about the potential impact.
“This comes just over a week after SQM Research confirmed that Labor’s housing taxes could increase rents up to 22 per cent and house prices could fall up to 16 per cent,” Senator Seselja said.
Senator Seselja said Labor’s proposals were “lose-lose” and would hit property values while pushing up rents, citing research conducted by property lobby groups Master Builders Association and the Property Council of Australia.
“Labor’s arrogant and ignorant housing tax shows that shadow treasurer Chris Bowen cares more about propping up his budget bottom line than he does about Australians,” he said.
Labor has previously come under fire for not setting a clear start date for the policy. In December 2018, Treasurer Josh Frydenberg described the plan as a “shambles”.
Benefits ‘skewed towards the wealthy’
But Mr Bowen said on Friday that Labor’s reforms would make the property tax system “fair, more sustainable”, and were conducive to increasing housing supply.
“The fact is, the benefits of both negative gearing and the capital gains tax discount (CGTD) are skewed towards the wealthy, with the Grattan Institute estimating almost 70 per cent of the benefit of the CGTD accrues to the top 10 per cent of income earners,” he said.
“Scott Morrison personally mishandled and stunted the growth of Build to Rent in Australia – by unilaterally and without notice banning managed investment in the scheme on Friday, 14 September, 2017, before partially back flipping on this in July of last year.”
‘Build-to-rent’ scheme overhaul
On Friday, Mr Bowen also announced a “revamp” of the build-to-rent scheme, which would offer “better tax concessions” to institutional investors to encourage new housing construction.
“Build to Rent provides more stable, long-term tenancies and more housing in desired locations close to public transport and close to employment opportunities,” he said.
“This is good for families who want to spend more time with each other, and less time travelling to and from work”
The revamp will include cutting the managed investment trust withholding rate from 30 per cent to 15 per cent for “tax distributions attributable to investments in build-to-rent housing”.