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Submission Equity

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Summary

This submission makes several key policy proposals, which are grounded in the below extended analysis. The fundamental premise is that we must consider whether housing is “inequitable”, what it means for housing to be “affordable”. Furthermore, we must not make policy changes that make the situation worse, reduce supply, and/or reduce revenue. Here, we summarize our key findings:

1. Any tax increase must be taken to an election. It is undemocratic, and profoundly autocratic, to institute a major tax change that was not taken to an election (and, indeed, was downplayed at the election). It undermines social cohesion, and is a threat to democracy, to encourage parties to lie in an election to be elected and then pursue policies that the electorate may not hare supported.

2. Increasing capital gains tax will backfire on housing; if you want more supply make investing more attractive (else no one will build): Hiking will result in less construction, a less efficient allocation of resources by deterring transactions, less tax revenue by incentivizing ‘forever holding’ and will penalize people who build, renovate, or modernize. It will not result in more supply and will worsen housing supply issues. By contrast, cutting CGT will encourage a more vibrant and liquid market, encouraging more construction.

3. Increasing CGT will harm younger Australians and worsen inequity: CGT hikes will deprive younger Australians of the opportunity to accrue assets and wealth that their forebears had. In so doing, hiking CGT disproportionately harms younger people relative to people who already benefited from lower CGT settings.

4. Australia already has the highest CGT rate in the world – this deters investment: Australia’s headline CGT rate can reach 47%. This is well above New Zealand, Singapore, Hong Kong, and the UAE (all at 0%). Vietnam – run by the Communist Party – scrapped CGT in 2025 (i.e., they have a CGT rate of 0%). China – also run by the Communist Party – has a CGT rate of 20%. In the US, the effective CGT rate is 21% (i.e., under a corporation). They have a 50% long term discount and a top federal income tax rate of 39%, meaning that the US has significantly lower CGT rates than Australia. The UK hiked CGT rates to 24% and CGT receipts fell. Australia is already on the wrong side of the “Laffer curve”.

5. Housing affordability discussions must consider lifecycle costs: It is not “affordable” to lose money on an asset even if the initial price is lower.

6. Policies that transfer wealth from one group to another are not equitable: It is duplicitous and deceptive to label a wealth transfer as an ‘equity’ measure. Rather, it is inequitable in the same way as it is inequitable for a robber to seize assets from your house.

7. Older people are wealthier because that is how time works: The longer a person has been alive the more years they will have had to accrue wealth and assets. This should be so obvious it goes without saying. A person who is now in “Gen Z” will eventually be elderly and have accrued assets: they will eventually become the “Boomer” to the then younger generation.

8. People do not need large savings to buy properties and Lenders already allow people to buy with low deposits: Lending products exist that allow people to buy properties with nearly 0% deposit. We already have stamp duty waivers. Thus, people do not need large savings to buy properties. This makes property more affordable, and access more equitable, than ever.

9. Reduce construction costs via lower taxes and less regulation: Government can reduce construction costs by reducing fees, charges, and taxes on new builds. It can also remove regulation, including in relation to cultural heritage, which adds costs, and causes delays.

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Submission Equity

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Submission

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Summary of recommendations

The cause of reducing hate speech and violence is commendable. However, the current exposure draft has significant flaws. The chief flaw – as indicated in Recommendation 1 – is that it is an omnibus bill that encompasses different causes that need separate debate (i.e., firearms, and hate speech). Furthermore, the law – with its punitive provisions – focuses too much on punishment and too little on rehabilitation. This document establishes several recommendations. However, given the tight time frame, and the magnitude of the Exposure Draft, this is not an exhaustive list of all areas that warrant attention.

The recommendations are detailed below and are:

1. Separate hate speech and firearms provisions into separate bills

2. Require procedural fairness in relation to the designation of hate groups

3. Do not reverse the burden of proof (per Part 7)

4. Penalties should be lower for all offences.

5. Racial hatred definitions and offences are too broad, and should have a mens rea (or intentionality element)

6. Greater analysis is required as to the efficacy of the proposed firearms regulations

7. Firearms compensation should be on market terms, not arbitrarily left to the states

Submission

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Should Australia increase capital gains tax (CGT) rates? Or will that risk backfiring. In this submission, we discuss CGT rates. We highlight that Australia’s CGT rates are already the highest in the world and that increasing rates could in fact reduce total revenue received via a reduction in growth and transaction volume.

Submission

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Summary of the recommendations

This submission makes recommendations that are designed to be at least revenue neutral over the long term and ensure and ensure budget sustainability. The overarching crux of the submission is that increasing capital taxes creates a significant risk of capital flight to 0% CGT regimes, including New Zealand. This, almost tautologically, would also involve the person leaving to that foreign jurisdiction, also decreasing income tax. Not only that, foreign capital would be deterred, undermining growth. Higher CGT would also create frictions in the market, reducing transaction frequency. This would reduce tax revenue and would stop capital from going to its most efficient use.

This submission is grounded in the idea that Australia should grow the economic pie and the tax base, rather than merely seek to divide a stagnant economic pie. This means that reducing tax rates can increase tax revenue, as the submission explains below. This operates by attracting, and retaining capital and labor. By contrast, increasing tax rates can reduce total tax revenue. This is because higher tax rates deter new capital from arriving, and cause existing capital to leave, thereby reducing the total tax take. It can also reduce the frequency, or size, of investment, thereby reducing total tax revenue. The main recommendations in this submission are:

1. The focus must be on growing the economy in order to grow the tax base. Increasing taxes in any area will undermine growth, risking a downward spiral via a shrinking tax base.

2. Increasing tax rates will reduce tax revenue: Do not increase capital gains tax in any area, or impose a wealth tax or inheritance tax. Australia operates in an international environment. People, and money, can and will leave. This includes to nearby locations (New Zealand) and more distant locations (UAE, Singapore, Hong Kong, US)

3. Reduce capital gains tax rates. Doing so will attract more capital, drive more investment, and increase economic growth. It will also increase the number and volume of investment transactions (i.e., times the capital gains tax is paid), thereby increasing total revenue. This will grow the economic pie, thereby increasing the tax base. Do not increase capital gains tax as this would undermine investment and result in capital flight.

4. Australia must benchmark its tax rates against economies that attract capital, which include the US, UAE, and Singapore. This is because human and financial capital can and will leave to those locations. Thus, to attract and retain human and financial capital, Australia must be at least as competitive as its competitors. Europe and the UK are an irrelevancy as capital need not go to either location and being less uncompetitive than Europe does not solve the problem of being less competitive than the US, UAE, or Singapore.

5. In Marxian terms, workers should own the means of production to ensure they are not servants to their employer, meaning they should invest in shares. This also implies people should invest in property. Unlike financial assets, property does not require special expertise, making it the ultimate egalitarian leveler. We should thus encourage more investment, not less.

Submission

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Download our full submission here.

Roundtable Submission

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Submission overview

This submission makes recommendations that are designed to be at least revenue neutral and ensure budget sustainability. It is grounded in the idea that Australia should grow the economic pie and the tax base, rather than merely seek to divide a stagnant economic pie. This means that reducing tax rates can increase tax revenue, as the submission explains below. This operates by attracting, and retaining capital and labor. By contrast, increasing tax rates can reduce total tax revenue. This is because higher tax rates deter new capital from arriving, and cause existing capital to leave, thereby reducing the total tax take. It can also reduce the frequency, or size, of investment, thereby reducing total tax revenue. The main recommendations in this submission are:

1. The focus must be on growing the economy in order to grow the tax base. Increasing taxes in any area will undermine growth, risking a downward spiral via a shrinking tax base.

2. Increasing tax rates will reduce tax revenue: Do not increase capital gains tax in any area, or impose a wealth tax or inheritance tax. Australia operates in an international environment. People, and money, can and will leave. This includes to nearby locations (New Zealand) and more distant locations (UAE, Singapore, Hong Kong, US)

3. Do not increase capital gains taxes, or reduce ‘negative gearing’, on property: doing so risks reducing total tax receipts by discouraging investment and reducing the number of sales transactions: a higher tax rate can result in lower total tax revenue.

4. Scrap Division 296 tax on unrealized capital gains. It will undermine investment, growth and productivity.

5. Reduce capital gains tax rates. Doing so will attract more capital, drive more investment, and increase economic growth. It will also increase the number and volume of investment transactions (i.e., times the capital gains tax is paid), thereby increasing total revenue. This will grow the economic pie, thereby increasing the tax base. Do not increase capital gains tax as this would undermine investment and result in capital flight.

6. Australia must benchmark its tax rates against economies that attract capital, which include the US, UAE, and Singapore. This is because human and financial capital can and will leave to those locations. Thus, to attract and retain human and financial capital, Australia must be at least as competitive as its competitors. Europe and the UK are an irrelevancy as capital need not go to either location and being less uncompetitive than Europe does not solve the problem of being less competitive than the US, UAE, or Singapore.

7. Immigration should not be reduced and residency should be quicker and easier for skilled immigrants. PR and TR could be reformed to help match qualified immigrants with companies, and encourage investment in training.

Roundtable Submission

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