Stephen Long at the ABC has written two articles in 2 days on genuine tax reform, commenting on the rumour that the Henry Review will promote a broad based Land tax, including the family home.
Let’s hope Ken Henry’s press release starts off with ‘Income tax cut in half, Land Tax tax to make up shortfall’ rather than ‘Family Home Slugged’. Stay tuned for the upcoming media battles.
If such a policy was to be implemented, there may be some short term pain, but essentially there would be less interest paid to banks, less overall tax, cheaper land prices, cheaper goods. Speculation in the human right to a roof over our head would thankfully be part of ‘the backward past’.
In today’s Henry Review a Ticking Time Bomb:
Doubtless, there would be howls of protest from the real estate industry, property developers, landlords and those rich enough to borrow and invest so they can minimise their income tax.
Should the review recommend some form of land tax or broad-based property tax, there would be a visceral and emotive reaction from homeowners and fear in the mortgage belts.
Never mind that, over time, the tax could raise enough money to provide a whole lot of needed services and/or cut income taxes and consumption taxes.
Commenting on a new report from Tax Watch, Long writes:
Professor Disney says a key area needing change is housing, which he says suffers huge losses of revenue and distortion.
“I think one of the major causes of the house price inflation is the tax system,” he said, referring to negative gearing that allows investors to write off the costs of their interest payments and the concessional capital gains tax.
“But also the total exemption of principal residences or the family home, as they’re sometimes called, from capital gains tax, land tax, pension assets test.
“I think the first thing is for the Henry report to tell it like it is. And over the 20 years I know from involvement with a number of official inquiries into these things, there’s been huge pressure from both sides of politics when in government not to tell it like it is,” Professor Disney said.
“We really need someone in this position, even if then the politicians decide not to go ahead, we really need someone to tell it like it is” said Disney.
Some interesting comments on the ABC website…