Australian Treasurer Scott Morrison, affectionately known by his trendy title ScoMo, is preparing to present the May budget. He is famous for explaining to Deputy Prime Minister Barnaby Joyce what coal looks like.
Barnaby is also Minister for Agriculture and Water Resources so he was surprised to find out about coal. But I digress.
One good idea for helping the budget is clearly abolishing negative gearing. Pretty much everybody agrees about this except all people who own negatively geared properties.
Unfortunately, this includes most of the sitting Liberal party MPs. ScoMo thinks abolishing it would be “cruel” which has introduced a new technical term into the lexicon of economics.
I’ve explained this in some detail. So it has Saul Eslake.
And Glenn Stevens
So here is my silly idea.
If we were to abolish negative gearing, we could substitute another tax deduction in its place. We could say to the people who sell their negatively geared properties, “If you invest the money from your negatively geared properties and invest in companies that are developing renewable energy technologies, we will allow you a 100% tax-deduction.”
Sound attractive? Of course it does.
So why is it such a good idea?
- Because it shifts investment into businesses that will be employing people.
- Because it shifts investment towards technologies that will lead to energy sustainability.
- Because it shifts investment away from mere speculation and towards productive industries
- Because it develops skills and technologies in the Australian economy that will be appropriate for the 21st century.
- Because it will stop making it attractive for people to own more houses than they can live in,
But don’t hold your breath.