I noted a particularly praiseworthy suggestion for reforming property taxes in the Australian Financial Review of June 26. The proposal came from Greg Smith, a former senior officer in the Australian Treasury and one whose knowledge of tax and tax reform is equal, I think, to that of former secretary Ken Henry.
The former senior Treasury official also said the tax deduction for interest on investment properties should be scrapped, while retaining the capital gains tax discount, and more revenue could be raised form taxes on fuel.
He said rental properties should be treated like owner-occupier property for the purposes of income tax.
“You know what a radical proposal would be? To exempt rental housing from income tax. We’d actually collect more money. Because at the moment we’re giving net loss deductions.
“So if we kept the capital gains tax on rental housing but treated it exactly the same as owner-occupier housing as far as the ordinary income tax goes, revenues will go up and yet we will say we abolished a tax,” he said.
An innovative solution to a problem which is causing grief in Australia at the moment, and which creates winners all across the field of vested interests.
Well done Mr Smith.