Slashing the CGT discount has economists’ support, but should new homes be carved out?
Top economists back a reduction in the capital gains tax discount, but there is little consensus on whether it would help boost housing supply.
Economists are split on whether Labor’s potential move to reduce the capital gains tax (CGT) discount in the May budget will level the property playing field, despite widespread public support for the proposal.
Speaking to Capital Brief, some of Australia’s top economic thinkers said they backed reducing the discount, or limiting it just to investors in new dwellings, while others want it scrapped altogether.
According to DemosAU polling conducted exclusively for Capital Brief, 40% of respondents support a reduction of the CGT discount from 50% to 25%, which has been floated by the federal government ahead of the productivity-focused budget in May. As first reported by the Financial Review, Treasury has been modelling a 33% CGT deduction.
PwC chief economist Amy Lomas told Capital Brief limiting the CGT discount to new dwellings could help boost supply while increasing tax receipts. And she pushed for the government to consider leaving the CGT discount in its current form for investors in new properties.
