Labor faces stiff Senate opposition to key tax hikes

A survey of the entire Senate crossbench shows that Labor, if it wins the election, has next to no hope of passing either the negative gearing or franking credit changes before June 30, 2019, the date the term of the existing Senate expires.

Source: https://www.afr.com/news/politics/l...e-opposition-to-key-tax-hikes-20181211-h18zeb

 

But if the election was in May 2019 (just after a budget delivered in April 2019) wouldnt the new or existing Govt (depending on the election outcome) have to wait until 2020 to deliver these changes anyway?

(Excuse any perceived naiveness...)

 

Throw a few sweeteners their way for their local electorate and they will change their mind pretty quickly.

 

Not much point speculating about this. A lot will depend on how much of a margin labor wins by.

Things may be very different in half a years time.

 

For years now, the ALP and BS have been saying that NG is the cause of the huge rise in property prices and keeping FHBs out of the market.

Now that Sydney and Melbourne property has dropped around 10% (and may crash up to 20%, 30%, ...) and NG is still in play, then maybe the ALP and BS might rethink their policy OR will they stick to this policy come what may?

We all know what happens to political parties that stick to ideology instead of using commonsense eg Libs with climate change.

Could this become the “John Hewson GST on birthday cake” debacle for BS and the ALP in the coming months?

 

I guess it depends on how affordable things become for fhb, not just in sydney/melb but also australia wide where property prices have not boomed as much but can still be 'too high' relative to salaries.

Also it depends how things work out in the budget. Doesnt look good for any party if the budget deficit keeps increasing. A lot of tax $$ revenue is 'lost' to negative gearing every year.

 

If your car stopped moving because you're running out of fuel, it doesn't mean an engine or transmission are not causes of car movement.

Everyone (almost) understands that there are multiple causes of property price growth, there are 15 at least AFAIR

BS is NG itself, regardless if it moves prices up or down. Has to be amended so that losses can be claimed only against future / past profits derived from investment, not against personal income

 

Senators don’t have “local” electorates. They represent states.

 

But if you re-fuel your car and it still doesn’t move, then fuel wasn’t the problem.

Can you pass this onto BS, CB and ALP because they aren’t aware of this.

IMHO, negative gearing is NOT one of the causes.

As an example, property is my home town (Toowoomba) peaked in 2012 and has gone sideways ever since. I bought an IP there last year using NG (a great opportunity presented itself) and prices are still stagnant.

Removal of NG won’t affect me as we are at the end of our accumulation phase. Grandfathering will protect us plus, as we have been buying IPs for nearly 30 years, any future NG properties we buy will be offset sgainst our current portfolio’s cashflow.

I really feel sorry for the people (both young and old) who are just starting out. They won’t have the same options to achieve financial independence like we had.

Very unfortunate for them.

 

I don’t see it as government revenue ‘lost’.

To me, it is a government incentive to encourage/help us to obtain our financial independence. This is a good thing for Australia.

Some people do the right thing and work hard to achieve financial independence; others are too busy having a good time to bother, ...

There is no right or wrong here. Each of us can make our our own choices and the government is rewarding us if we do the right thing.

The are many government incentives - baby bonus, accelerated depreciation for businesses, remote area allowances, ...

All are rewarding people including taxpayers for the right behaviour.

 

As a property investor may say. A person who owns no property may see the tax concessions as assisting the investor by foregoing tax revenue.

Its like super taxes at 0% or 15% dont benefit people with no super. Only benefits the wealthy and the more they have the bigger the benefit.

And why Govt often bring in caps or limits. eg Div 293 tax scales back super tax benefits, contribution caps too. eg Div 40 depreciation changes by the Libs and the proposed ALP plans. The ALP franking credit plan is same

When the scales tip too far one way there is a opposing measure to bring them back.

 

They often only represent their party. Look at Bob Carr. Didnt even get voted in. Didnt do jack for anyone except Bob Carr. And then he ran fast when the party music ended. He propped up Gillard

 

But one can equally argue that removing NG will lower prices and make it easier for younger people to get on the housing ladder and secure their financial independence. Personally I don't believe any of the scare stories but if it's true that removing NG will see rents increase, I'll be much better off. If the Libs really want us to believe that prices will fall by 20% if NG is removed, non IP buyers are currently paying 25% too much because of it.

 

If so many cross benchers oppose the change, and it has no chance of being legislated why is everyone getting so worked up about it?

If it's not going to happen in it's current form, can we all just take a nap and ignore it?

 

Labor's negative gearing proposal might cause prices to drop, or not. It's quite possible that some types of properties will increase in value in some scenarios. If you can only negatively gear new houses, guess what's going to become popular?

In all the arguments I've seen, I haven't seen anything that would cause rents to drop. I can see scenarios where rents increase, I can see scenarios where the rents just keep doing what they're doing. I can't see rents dropping.

The funny thing is that in my line of work I do see people struggling to buy their first home. They're usually not struggling with qualifying for the amount they want to borrow, it's the deposit which is the real challenge. With the ever increasing cost of living alongside rents that people constantly complain they can't afford, saving for that first deposit is a serious challenge.

Fundamentally Labor's proposals will be a serious disruption to the property market. It will also create opportunities and the people best placed to take advantage of these opportunities will be those with a lot of cash and income. The rich will get richer.

I don't see any serious chance that it will make things any easier for most first home buyers though.

 

Old school labour may be just what this country needs. Swing the balance in favour of the worker drive up wages. Not sustainable long term but may just dig us out of the hole we are currently digging for ourselves

Can’t see removing NG will help anyone in any significant way though

 

Hopefully this is. John Hewson was perhaps the best prime minister we ever got...

The city centric ALP just don’t seem to get that for us in the regions, high property prices and housing affordability simply aren’t concerns - all this stuff just reeks of class warfare. Ironic, considering BS himself lives in a very nice part of Moonee Ponds and many Labor MPs representing less fancy electorates don’t even live in their seat!

 

Well said.

I try to look at the positives. Every now and then something comes along that reminds us that investing based mostly on tax benefits should be secondary to sound investing principles such as selecting quality assets and diversification etc. Of course tax benefits shouldn’t be ignored but not to a point that one is locked in substantially and suffer substantially if the benefit is removed!

Change never stops. Rather than complaining best to find ways to turn **** into sugar. Hence why I have minimal interest in endless rebellion but great interest in possible solutions to minimising the impact of change or even benefitting from it should it occur.

 

Thank you for pointing out the obvious loophole in the (possibly) forthcoming legislative change.