With concerns about national housing affordability amid the seemingly never-ending property boom, speculation continues that the Australian Labor Party (ALP) will re-introduce limits on capital gains tax deductions and negative gearing.
Despite the global COVID19 pandemic, Australian property prices have continued to rise. Unlike previous property booms which centred on capital city housing markets at the expense of regional centres, regional towns and cities are now feeling the heat of housing affordability issues as the pandemic drives families out of the capital cities and remote work becomes the new norm for many workers.
With the Federal election to be held in late 2021 or early 2022, the ALP is reserving its options in relation to negative gearing and capital gains tax, despite the ALP National Executive recently voting to remove the policies that Bill Shorten took to the 2019 election.
Despite an ALP source stating that negative gearing and capital gains policies are “.. not in the platform because we haven’t decided yet”, there is continued speculation that the party will reintroduce more politically palatable versions of these policies as the election draws closer.
The ALP went into the 2016 and 2019 elections with policies to reduce the GCT deduction from 50 per cent to 25 per cent and limit negative gearing to new properties only.
Whilst these policies were not vote-winners for Shorten, there appears to be continued support within the ALP for a less radical approach, such as reducing the CGT rate from 50 per cent to 30 or 40 per cent and limiting negative gearing to two properties. This would reduce the effect on the majority of “mum and dad” property investors and capture only the property “high-rollers”.
With the Liberals riding high on their stimulus spending and economic management during COVID19, Albanese needs to appeal to Labor’s true believers more than ever.
If Albanese manages to tweak capital gains tax and negative gearing policies to tax the wealthy and reduce the heat on an overheating property market, whilst sparing mum and dad investors, the ALP may have a chance at winning the next election.