Because the FHOG is compensation for the taxation effect of the GST. So by removing it you are basically having higher taxes.
The Abolishment of the Negative Gearing Debate
- Thread starter Rixter
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Because the FHOG is compensation for the taxation effect of the GST. So by removing it you are basically having higher taxes.
That's a long bow to draw.
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bold post on a property investors forum
Negative gearing doesnt cost the government a cent. If people want to subsidise housing for people who dont want to own, good on them.
I think the government should be thankful for the money they already get.
hobo
You conveniently left out Sims answer to Geoffw
No Geoff, the FHOG came into effect on July 1, 2000 - the same time that GST was introduced.
The grant was introduced:
"To offset the impact of the introduction of the goods and services tax (GST)"
You said... 'they simply need to completely do away with the FHOG and other FHB concessions'
So that's two different things... FHOG, and other FHB concessions.
Doing away with FHB concessions is the same as increasing taxes. Stamp duty is a tax. FHB stamp duty concessions reduce that tax. Doing away with the concessions increases the tax. Your other idea, scrapping the FHOG, is just one more way the government could further increase its (already massive) 'net take' from the property sector.
As Peter mentions, taxes are needed to pay for services. However, one sector of the population (homeowners) currently pay more than their 'fair share'. Homeowners don't necessarily utilise more roads, healthcare, education etc. than everyone else, but they do pay more towards those services than non-homeowners.
Anyway, it's also worth noting that the government is addicted to this massive flow of income that they receive from homeowners, which is one reason why they will always be supportive of house prices. While the 'powers that be' have the ability, through fiscal and monetary policy, to support house prices, then we simply won't have a property crash. Best not to bet against the house.
I remember that time. People were coming out of retirement to help overcome the shortage of tradesmen as people rushed to build before the GST. Demand for new building was brought forward.
I will add that LL or PIs pay most:
LL has to pay land tax in the ACT
land tax > rates at least for one of my property
LL pays land tax + rates > 2 x rates
homeowner pays only rate
LL pays more than 1 extra rate to subsidise state housing and services
In other words, you think property should be taxed even more heavily than it already is. The government currently takes far more in tax from the housing sector than it gives back in grants and concessions. The government basically treats the Australian property market as a 'cash cow', using their massive net tax intake from homeowners to fund other essential services.
Some rough figures...
Government outgoings to property
Negative gearing ~$2.5b (tax forgone on $6.5b losses claimed)
FHB grants ~$0.7b ($7k times 100,000 FHBs)
TOTAL GOV SPEND ~ $3.2b
Government take from property
Rates ~ $9b (~$1000 on 9m dwellings)
Stamp duty ~ $6b (~$15k on 400k transactions)
GST ~ $6b (~$40k on 150k new dwellings)
Development and approval fees ~ $15b (~$100k on 150K new dwellings)
Plus more fees for extensions etc
Plus land tax ~ $6b
Plus CGT on sales
TOTAL GOV TAKE ~$42b+
And your 'solution' is for the government to take more, and give less! Why? So that house prices will fall enough to justify your decision to sell your home?
Excellent post shadow.
I didn't realise the numbers were so skewed in favour of the gov.
They're not. The post by shadow includes all property, not just investors, so divide it by 3. And delete rates, they are paying for a service, not a tax. And negative gearing costs are nearly double that.
Real investors would welcome the abolition of negative gearing, it gives an unfair advantage to speculators over everyone else (home buyers & investors). If you really are an investor, wouldn't you rather be able to buy property cheaper & get a higher yield ? It just makes sense.
Eventually negative gearing will go, it's just taking a bloody long time. Perhaps one day when Australia is struggling the IMF will give it the chop for us.
My mistake, should have scrolled further. However regardless of the reason it was implemented, it's still a long bow to draw suggesting that it's continued use has anything to do with reducing the impact of GST some 12 years after implementation.
My issue is primarily with the cash in pocket grants distributed that they are able to leverage, First Home Owners Grant, First Home Owners Boost and other various state freebies. These are the handouts which allow FHBs to really push prices a lot higher (providing the serviceability is there).
+1
Investors chase yield (and there still are some on this forum I'm sure).
Speculators chase capital growth which outstrips their higher than rent holding costs.
hobo
You consistently make mistakes to suit the bias of your arguments.
When I made one mistake regarding stats. which I acknowledged, you used this to claim that I was dishonest and you continued to accuse me of dishonesty.
This says more about your character than mine.
Still waiting for your answers in this thread, or is that to difficult for you?
http://somersoft.com/forums/showthread.php?t=78802&page=17
You mean like when you tried to use differnet indices to show prices have risen over the last couple of years? http://somersoft.com/forums/showpost.php?p=920241&postcount=76
lol. Pot, meet Kettle.
And thats why I said NG will never be abolished. They tried and found out its a revenue cash cow for the govt.
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The land tax revenue alone is around triple the value of negative gearing 'costs'. And that doesn't include the CGT, which owner-occupiers also don't have to pay.
hobo
Once again your comprehension is sadly lacking, the point was consistently make mistakes, you continually point out one mistake I made.
As for the Pot calling the Kettle black, you accused me of dishonesty when this happened, I have not accused you of being dishonest, as I stated this says more about your character than mine.
Obviously if your knowledge of economics was as great as you think it is you would have not a problem with answering the 3 questions asked in this thread
http://somersoft.com/forums/showthre...=78802&page=17
1)You describe measures taken by the Chines Gov. to stimulate the economy as "growth accommodating policy", not part of a stimulus package.
2)When China cut key interest rates to boost economy you stated that the rate cuts not stimulus and
3)that post GFC use of the word(stimulus) generally refers to cash handouts/bailouts.
other than these 3 points being figments of your imagination are you capable of posting any credible references to support these hobojoian economic theories.
turk, is there a need for your consistent trolling? IMO that says a lot more about your character than it does about mine.
The link you posted is broken (again).
Correct I don't consider a "rate cut" to be "stimulus".
I was not using growth accommodating policy as a term, I was using it as a descriptor.
The link you posted is broken (again).
Correct I don't consider a "rate cut" to be "stimulus".
I was not using growth accommodating policy as a term, I was using it as a descriptor.
"Long slow melt", vs "crash"? doe's it really matter.
I'm sure it has always been in Governments interests to stop both, doesn't mean they manage it though.
I'm sure it has always been in Governments interests to stop both, doesn't mean they manage it though.
Why divide by three? I wasn't limiting the comparison to investment property only, I was looking at the entire housing market.
Rates and taxes are both used to fund services. They are both a government 'take' from homeowners.
The NG figures are correct.
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