Calls to Reform Capital Gains Tax Discount and Negative Gearing Amid Housing Affordability Concerns in Australia
The Australian Manufacturing Workers Union (AMWU) has called for an immediate reduction and eventual phase-out over two years of the capital gains tax (CGT) discount on investment properties, alongside the abolition of negative gearing. The AMWU also proposed a rent-to-own scheme as an alternative for renters.
Similarly, the Australian Nursing and Midwifery Federation advocates ending the CGT discount, citing inequality and housing affordability issues. A Senate inquiry led by the Greens has gathered submissions recommending limiting negative gearing and the 50% CGT discount to a single investment property, with a five-year grandfathering period.
Despite Treasury modelling the potential concessions in 2024, the government did not pursue these reforms before the federal election last year. The AMWU suggests that such reforms could reshape housing debates, help prevent the commodification of housing, and funnel revenue into developing modular housing.
Treasury data projects the 50% CGT discount will cost about $21.8 billion in forgone revenue in 2025-26. The Grattan Institute recommends a more moderate 25% CGT concession phased in over five years, which could generate an estimated $6.5 billion annually, arguing that the current discount overcompensates investors. Conversely, the Centre for Independent Studies supports retaining the 50% CGT discount, citing its simplicity and widespread understanding.
The Senate inquiry report is expected by 17 March. Meanwhile, the Labor Party faces ongoing internal pressure to overhaul housing tax breaks ahead of its national conference scheduled in Adelaide in July.
