Costello Rejects Government Commission Recommendations On Property Taxes

by Mary Swire, Tax-News.com, Hong Kong

24 June 2004

Australian Treasurer Peter Costello has restated the government’s intention not to change aspects of the country’s property tax system in order to make it easier for first time buyers to enter the market.

Costello was responding to a report by the Productivity Commission, which has urged the government to review taxation in the property sector in a bid to cool the recent boom in property prices.

However, in a statement Costello reaffirmed the government’s position on the issue, indicating that the present system is working adequately.

“As previously announced, the government considers that it would be inappropriate to change existing arrangements relating to capital gains or negative gearing,” the Treasurer stated, adding that improved incentives to save and invest through the country’s “internationally competitive” capital gains tax regime are already in place.

“The government will therefore not be conducting a review of the tax system with respect to housing or changing the capital gains tax provisions,” he declared.

However, Costello welcomed initiatives underway in state and territorial governments providing stamp duty relief for first time buyers. The Commission found that reductions in stamp duty would improve the efficiency of the housing market over time.

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