Malcolm Turnbull: Negative gearing is off the table and blancmange is on (again)

The Age reports that “The Coalition will make no changes to capital gains tax and negative gearing arrangements, as Prime Minister Malcolm Turnbull signalled an election campaign focused on property values and household wealth.

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 Malcolm Turnbull is short of budget options

After weeks of suggesting the government might make some changes to negative gearing at the higher end of the income scale, Mr Turnbull said it was “common sense” to make no adjustments to existing arrangements.

Mr Turnbull faced opposition to any changes to negative gearing from within his own party room, including from former prime minister Tony Abbott.”

Well, opposition from within the party is something he could have expected but then again, he could have expected support from within the Labor Party because a goodly proportion of parliamentarians own negatively geared properties.

Turnbull has done a remarkable job of ruling out  options for the budget and has effectively left himself and Treasurer Scott Morrison no political or economic wriggle room.

If he goes to a double dissolution, he must be hoping that his budget is going to earn a lot of political brownie points. So it’s going to need to be a political masterpiece, given that he has decided not to address the issue of bracket creep or of the debt and deficit crisis so actively touted by Abbott and Hockey when they were around.

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The days of shock/horror debt and deficit crisis are over

His decision to focus on property values and household wealth is going to be a difficult one to pursue because the only option has a scare campaign about Labor destroying capital value of family homes with its policy of restricting negative gearing to new properties.

Particularly in the light of the report published by the Grattan Institute and published in The Age today which shows that:

Surgeons, anaesthetists, finance managers and lawyers will be the overwhelming beneficiaries of the Turnbull government’s decision not to touch negative gearing in the budget, research shows.

The report also finds that teachers, nurses, hairdressers and sales assistants are among those least likely to negatively gear. The top 10 per cent of earners collect almost half the negative gearing tax deductions and three-quarters of the concessionally taxed capital gains.

What is not mentioned is the huge number of people who don’t,And can’t afford to, negatively gear at all, hairdressers, builders labourers, waiters and waitresses, all the low income earners who subsidise the top 10%.

One of the profound ironies of the situation is that Malcolm Turnbull’s wife, Lucy, is a director of the Grattan Institute. She is also the head of New South Wales Government’s new Greater Sydney Commission tasked with tackling Sydney’s housing affordability crisis.

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