Advocates urge Chalmers to scrap CGT discount and negative gearing ahead of budget

Housing and inequality campaigners are urging Treasurer Jim Chalmers to go big in next month’s budget and abolish the full capital gains tax (CGT) discount and negative gearing, arguing partial changes will do little to ease the deepening crisis.

According to The Sydney Morning Herald, Mr Chalmers is “leaning towards” a return to the pre-1999 capital gains tax system – a move advocates have welcomed.

“We can’t fix the housing crisis while we hand $20 billion a year to investors,” said Chels Hood Withey, founder of House You.

“It’s time to stop fuelling the problem: house hoarding, and start delivering the solution: public housing.”

The Keating-era inflation indexation model would ensure tax is only paid on real gains, not those driven by inflation.

The old system also allowed taxpayers to use an averaging formula to spread the capital gain over five years.

Advocacy groups say the reform would deliver “exactly the kind of leadership this crisis demands”.

“What matters now is whether any changes actually help fix the housing crisis,” said Everybody’s Home national spokesperson, Maiy Azize.

“That means changes big enough to stop fuelling speculation and to free up money to build the public and community homes that Australia desperately needs, not just tweaks that raise money for the budget.”

Anglicare Australia’s latest Rental Affordability Snapshot showed just how dire the situation has become for people on income support or low wages.

Its analysis of nearly 49,000 homes found that just one rental nationwide was affordable for a person on JobSeeker, while none were in reach for someone on Youth Allowance.

Antipoverty Centre spokesperson Kristin O’Connell said the figures show how far income support has fallen behind soaring rents.

“Centrelink payments have never been further below the rents we are forced to pay in the private market,” she argued.

“Tax handouts introduced at the end of last century have accelerated inequality for too long and left more and more of us behind.”

Analysis by the Australia Institute shows negative gearing and the CGT discount cost the budget around $20 billion a year.

The tax concessions are also heavily skewed toward the wealthy, with more than two-thirds flowing to the top 10 per cent of income earners, while the bottom half receive less than one-tenth.

The coalition of housing and social advocacy groups said it will not be enough for the government to only reduce the CGT discount, limit negative gearing to one or two investment properties, or grandfather changes so existing investors aren’t affected.

“The Albanese government has the power to get rid of these perverse incentives, reverse the inequality trend and live up to community expectations by ensuring everyone has a place to call home,” said Ms O’Connell.

Advocates said $20 billion in savings would go a long way towards building more public, high-quality homes for people in need.

“We are united: the only reform equal to the scale of the crisis is to urgently end handouts for property investors, with the tax revenue directed to providing high quality, beautiful public homes.”