MORE than one million Australians are now embracing negative gearing to the tune of an $8 billion annual tax break.
But according to new research by the Australia Institute think tank, its use has spread from traditional Liberal seats to “battler” suburbs held by Labor, The Australian reports.
The single biggest group of people using negative gearing live in the Labor heartland of Canberra, including 18,200 voters in the electorate held by opposition assistant Treasury spokesman Andrew Leigh.
The heaviest users, however live in government electorates held by Tony Abbott and cabinet ministers including Joe Hockey and Malcolm Turnbull.
The report highlights the political challenge now facing both parties in any attempt to wind back negative gearing and an associated tax break on capital gains.
“People in Liberal Party seats on average were likely to get the largest benefit from negative gearing,” said Australia Institute senior economist Matt Grudnoff told The Australian.
“Those in Labor seats were second and significantly further back are those in Nationals seats.”
The research was conducted using calculations by the National Centre for Social and Economic Modelling, which matched postcode data from Australian Taxation Office statistics with electorates.
According to the research, more than half of the tax breaks by dollar value go to households in the top 10 per cent of the country when ranked by income.
Grattan Institute chief executive John Daley said: “Most of the benefits in financial terms and most of the cost to the government goes to high-income earners. The idea that you keep negative gearing to look after middle Australia, given where the cost goes, is bizarre.”
Story source: www.theaustralian.com.au