Australia's largest industry has warned a Parliamentary Committee into Tax Deductibility that changes to negative gearing will exacerbate Australia’s undersupply of housing and harm average income earners.
New data has revealed that over 430,000 Australians who negative gear an investment property live in marginal seats held by the Government and the Opposition. The ten most marginal Coalition seats have an average of 8,181 investment property owners and the ten most marginal Labor seats have an average of 8,357 property owners.
“Mums and dads see owning an investment property as a way of securing their long term prosperity," said Property Council Chief Executive Ken Morrison.
“There are 840,000 Australians with taxable incomes below $80,000 a year who negative gear. This includes 53,800 teachers, 52,000 retail workers, 35,900 nurses and midwives, 22,600 hospitality workers and 10,400 emergency services workers.
“Interest deductions on property are legitimate deductions. Deductions for interest have been a fundamental part of the Australian tax system for 100 years.
“Two million Australians own an investment property. These people are doing the right thing and investing for their retirement or putting away for a rainy day.
“To play with negative gearing is to play with the financial futures of 430,000 people who live in the most marginal seats. That’s enough voters to swing all of these seats eight and a half times over, a big political risk to take with people with a lot at stake.
“Limiting interest deductibility will make investments more expensive. In turn, this will exacerbate Australia’s undersupply of housing and infrastructure. This is the wrong approach for the challenges we have to face.
“Australians already pay $72 billion a year in property taxes – and property owners don’t want government’s hands reaching even deeper into their pockets.”