The great big taxation discussion

[stui magpie]

[Tannin]

Try getting your facts right, Stui. As I already said, the overwhelming majority of negative gearing rort money goes to very wealthy people who own two, three, five, seven different houses. Your examples are at the fringes only, you are not touching the great bulk of the rorting.

Secondly, no-one is talking about doing anything even slightly harmful to anyone here. Got that? Not even slightly harmful. Get rid of the negative gearing scam and there is absolutely nothing stopping those people you mentioned buying an investment property. Absolutely nothing. The only difference is that they are now buying it with their own money, not leeching off the poor bloody taxpayer.

[think positive]

[think positive]

[think positive]

[watt price tully]

[David]

Considering it's been policy taboo for so long, what's the actual reasoning for allowing negative gearing in the first place? I understand that personal greed makes it a loser at the polling booths, but who ever thought that decreasing potential tax revenue and inflating housing prices was a good idea?

[sixpoints]

I don't begrudge anyone who jumped on the speculative housing investment bandwagon. It was an easy and obvious way for an individual/family to accrue some private wealth.
The fact I think it's a massive mistake for our nation as a whole is a separate thing.
Presently the situation has Australia as the number one nation on the planet for Household Debt. Everyone bangs on about the Government debt and deficit, but that is far more easily managed than crippling household debt levels.
Household debt meaning; mortgages, credit cards, overdrafts & personal loans. That leaves the personal financial status of many of us on a knife edge. This level of vulnerability is obviously not a good thing.
The one killer to the system, (or more correctly to the deck of cards) will be inflation IMHO.
Inflationary pressures will raise interest rates and kaboom the housing market will be blown asunder.
I fear the tide is turning against us - a rise in GST (to make up the shortfall in tax income that we presently give away ala negative gearing etc) and the fall in the value of the $A (pushing up the costs of imports) will exert inflationary pressure. Prices for goods and services will naturally rise if we add more tax to them or our dollar falls.
The pressure on the stressed out, mortgaged out, indebted out, will be to demand higher wages to keep up.
If we get into some inflationary spiral, then interest rates must rise as the value of the dollar drops as lenders won't cop a reduced value for their loan repayments.
Mum and dad investors will then have higher interest rates on their beloved investment property and they too will stress. The pressure then will be not to invest in speculative housing, but to divest. En masse they all try to sell before the next guy does. The bubble bursts.
Inflationary pressure and interest rate rises will do this.
I suppose when you compare nation to nation, some one has to top the pile for household indebtedness. It's just a pity that government hand outs and somewhat gullible individual personal investment strategies have left us so vulnerable.
I pity the party in charge if (when?) the bubble bursts - they will cop a right whack in the polls.

[stui magpie]

[David]

^ Fine with me.

[stui magpie]

The Libs have put the tax system on the agenda for discussion, and rightly so.

http://bettertax.gov.au/

Pretty much everyone seems to agree that the current taxation system is �$%$ed. It's been built on a foundation that comes from a different world, had tack ons and amendments that were probably well meaning at the time but have been exploited over the years. basically, IMO, it's weatherboard house built in the 50's that's been extended and modified multiple times to the point that it's just beyond repair and needs to be demolished and rebuilt.

So. Contributions from the collective wisdom of the VPT.

Just one request, try to actually think about it rather than just regurgitating cant. If you touch any part of a system like the overall taxation system, it has consequences both intended and unintended.

have a read of the stuff at the link. Lots of our Public Servants created that and ask yourself some questions.

is it fair that bracket creep, if left unchecked, will eventually have everyone in the top tax bracket?

Why should savings be all taxed differently? Interest on money in a bank account gets slugged at marginal rate tax, but super, shares and others get various rates of concessional tax.

Should the GST be expanded or increased?

Organisations like Uber now exist that are valued at a full metric fuckload of money, yet have fuckall actual assets or employees. Air BNB similar. The new age of doing business is/will have a serious impact on tax collection from a system that's based on gouging most of it's revenue from the poor working stiff.

How do we design a tax system for the 21st century that is fair and generates the revenue the country needs to pay for services such as health and education, just to name a few.

"Tax the rich more" is the statement of an idealistic imbecile, try to apply some actual thought.

And hey, if you really come up with some good ideas, tell someone who cares, like Treasury.

David, do your stuff.

[Pies4shaw]

[David]

[think positive]

Funny I feel judged!

[Pies4shaw]

^^^ No need to feel "judged", tp and I apologise if I contributed to that. I just hoped to provide a reasoned explanation of how, historically, negative gearing in its present form came to be permitted, the problem I believe it has created and why it, in my opinion, the system requires reform.

It's perfectly legal and many people take advantage of it. I deliberately avoided using the word "rort" - that is, a fraudulent or dishonest practice - to describe it because I do not consider that people who are just doing what they are allowed (and, frankly, encouraged) to do should be criticised. I judge the system and the politicians, not the ordinary people who live their lives in accordance with the system. Indeed, one might go further than that and say that, as with superannuation investment, people are doing precisely what the tax concession was intended to encourage them to do.

Finally, I only mentioned my personal position at all because over the years people have been too ready to say "Oh, you're just jealous because you can't". My reference to negative gearing on holiday houses being "unethical" is because that area does seem to me to be closer to being actually dishonest (because it is often predicated upon using a property in a "seasonal" area during the peak, advertising it for "holiday letting" for the rest of the year when no-one will want it and then claiming that the holiday house was a failed rental venture for 48 weeks of the year, for which eleven twelfths of the expenses are deductible).