A parliamentary inquiry has found that Australia's capital gains tax (CGT) discount, introduced under the Howard government in 1999, is exacerbating intergenerational inequality in the housing market. The Greens-led inquiry's report, released on Tuesday, concluded that the 50% discount for assets held over a year has skewed housing ownership away from owner-occupiers and towards investors, with benefits unequally distributed across income and wealth brackets.
Treasurer Jim Chalmers has signalled openness to reform ahead of the May budget, noting that Treasury is modelling a reduction of the discount to 33% for housing investments while retaining the current rate for shares. Labor members on the committee linked potential changes to ongoing government work addressing intergenerational tax inequality. The report highlighted that home ownership among 30-34 year olds has fallen from 57% when the discount was introduced to 50% today.
Greens Treasury spokesperson Nick McKim argued that the discount effectively taxes workers like teachers and tradespeople at double the rate of property speculators, calling for ambitious reform. However, Coalition senators Andrew Bragg and Dave Sharma rejected the findings, labelling any changes a 'gimmick' and insisting the real solution is increasing housing supply. Independent senator David Pocock proposed removing the discount for existing properties bought after July 1, with a reduced 25% discount for new homes, and limiting negative gearing to one investment property.
Research from the Australian Council of Social Services revealed that the five highest-earning electorates capture 22% of all CGT discount expenditure, compared to just 1.6% for the bottom ten. A tax white paper by independent MP Allegra Spender suggested reducing the discount to 30% as part of broader income tax cuts. Chalmers said he would be briefed on the report's findings but stressed that budget decisions remain with cabinet.
